Iron ore futures rallied on increased steel production and restocking activities, amid market concerns over power crunch in China.
The futures of Dalian Commodity Exchange (DCE) for January delivery then went up by 6.48% day-on-day or up RMB 48.50 to RMB 797.50/mt, during the day trading session on Monday.
The rebar futures also inched up slightly by 0.75% day-on-day or up RMB 43 to RMB 5,808/mt, during the day trading session.
More production in anticipation of looser steel output curbs
Trade participants had raised steel production as evident of higher blast furnace capacity utilization recorded at an average of 79.94% as of Oct 7, up 1.25% on-week.
As market sentiments were buoyed by high steel prices and expectation of less stringent steel output measures in October and November.
Thus, Mysteel expected rebar prices to rise further over the Oct 11-15 period, in view of steel demand to pick up after the Chinese holidays, as domestic rebar prices rallied for the sixth consecutive weeks to RMB 6,023/mt as of Oct 8, up RMB 98/mt on-week.
Shagang raises long steel prices over tight supply
China’s largest private owned steel mill, Shagang had increased its long steel prices by another RMB 100-150/mt on Monday, in relation to the higher input costs for steelmaking.
The private mill had complied with the state’s power rationing policy in the province of Jiangsu recently, which reduced its steel production while raw material costs were expensive with high coking coal prices.
Some trade participants expected other mills might follow to hike up long steel prices in October, amid the ongoing output curbs and power crunch situation in China.