Posted on 28 Jun 2023
Futures prices of major ferrous commodities across China including steel, iron ore, coke and coking coal all rebounded strongly on June 27 after the prior day's declines. Market sources cited growing expectations that China's central government will soon unveil more stimulus policies to support the domestic economy and to further stabilize the still-struggling real estate sector.
Among all ferrous futures contracts, iron ore prices led the rise on Tuesday, with the most-traded iron ore contract for September delivery on the Dalian Commodity Exchange (DCE) gaining a significant 4.1% on day to close the daytime trading session at Yuan 824/tonne ($114.2/t).
"The strong performance of iron ore prices – whether in the spot or derivatives markets – had largely to do with Chinese mills' robust demand for iron ore," a ferrous analyst in Shanghai told Mysteel Global.
Mysteel's regular tracking among 247 Chinese steel mills showed that as of June 23, these mills' hot metal output had increased for the third straight week to average 2.46 million tonnes/day in total, as most have managed to earn some profits from selling steel so far this month.
The mills' immediate needs for steelmaking inputs to maintain their blast furnace operations also lent some support to coke and coking coal prices, the ferrous analyst noted.
For example, the most-traded coke and coking coal contracts both for September delivery on the DCE strengthened by 2% and 2.3% during the daytime trading session on Tuesday to close at Yuan 2,096.5/t and Yuan 1,333/t respectively.
The strengthening of raw materials derivatives also buoyed steel futures prices. The most-traded rebar and HRC contracts for October delivery on the Shanghai Futures Exchange rose by 2.1% and 2.4% on Tuesday to climb above their respective psychological thresholds of Yuan 3,700/t and Yuan 3,800/t. The two contracts concluded the trading day at Yuan 3,728/t and Yuan 3,835/t, according to the bourse's data.
"Additional policy support (for the domestic real estate sector in particular) will surely lift the market sentiment and buoy steel prices in the short term, should such policies to be introduced soon," the ferrous analyst said.
Source:Mysteel Global
