Posted on 23 Aug 2023
Futures prices of major ferrous commodities traded in China including steel, iron ore, coke and coking coal all strengthened on August 22, with raw materials futures outperforming finished steel-product derivatives. Market sources cited the near-term firm demand for steelmaking raw materials and tighter coal availability after mine-safety checks in some regions after recent accidents had disrupted production.
On Tuesday, the most-traded contracts of steelmaking materials on the Dalian Commodity Exchange (DCE) including iron ore, coke and coking coal – all for January 2024 delivery – had all jumped by the time the daytime trading session ended, the bourse's data showed.
Notably, the DCE's coking coal January 2024 contract experienced a spike of 5.3% or Yuan 75/tonne ($10.3/t) from Monday's settlement price to close at Yuan 1,490/t when the daytime trading session ended. Meanwhile, the exchange's coke and iron ore January 2024 contracts also swelled by about 5% and 4.5% over the course of the DCE's trading day to close at Yuan 2,241.5/t and Yuan 805.5/dmt respectively.
On the other hand, the most-traded rebar and hot-rolled coil contracts on the Shanghai Futures Exchange both for October 2023 delivery increased by 1.6% and 1% respectively after the prior trading day's declines to close Tuesday's daytime trading session at Yuan 3,723/t and Yuan 3,917/t respectively. The rises were driven by the uptick in raw materials futures prices and heightened market sentiment, a market insider remarked.
"The frequent coal accidents recently have led to stricter safety inspections regionally, and more coal mines have been asked to suspend production, while the resumption pace of mines that had been shut down earlier was still slow," he said. "This resulted in the relatively tight supply in the domestic market in the short term and boosted market sentiment as well," he added.
Local authorities in Gujiao city in North China's Shanxi province have ordered nine more local coal mines to halt operations following an accident on August 18, lifting the number of suspended mines in Gujiao to 15 out of the city's 20 mines, as reported.
Meanwhile, a gas explosion in a coal mine in Yanchuan county in Northwest China's Shaanxi province on Monday night killed seven miners, Mysteel Global has learned, though details about the accident and the local government's response remain unclear.
On the other hand, "blast-furnace mills in some regions still have plans to resume production this week," the industry source said. "And with specific policies regarding steel production controls this half-year still yet to be officially released, both have shored up demand for steelmaking raw materials."
Over August 11-17, daily hot metal output among the 247 Chinese steelmakers under Mysteel's tracking hit a one-month high of 2.46 million tonnes/day on average, rising by 20,200 t/d on week and marking a three-week climb.
Source:Mysteel Global
