- Active iron ore contract in DCE rose by 2.09% on-day at RMB 634.50 per tonne.
- Steel rebar futures in Shanghai Futures Exchange also increased by 1.21% on-day to RMB 3,344 per tonne.
- The higher steel output was due to the end of the production restriction of Tangshan which immediately prompted an uptick in DCE.
According to an article published in Freight Investor Services, Dalian Commodities Exchange (DCE) ended the week on high with a late uptick seen in the afternoon session.
Increase in active iron ore contract rates
The most active iron ore contract for January delivery in DCE rose by 2.09% on-day at RMB 634.50 per tonne, while the steel rebar futures in Shanghai Futures Exchange also increased by 1.21% on-day to RMB 3,344 per tonne.
Expiry of production restriction in Tangshan
The firmer futures market may take its cue from the strong rebar market, which rose on market anticipation of higher production in Tangshan.
The expected higher steel output was due to the end for the production restriction of Tangshan on Thursday afternoon, which immediately prompted an uptick in DCE.
This was a little breathing space for the Tangshan-based steel mills to raise production without any clear and pending instructions for the next production restriction phrase.
Hopes of higher steel productivity were raised further as the Tangshan authority ended a second-level smog alert later on Thursday afternoon due to the arrival of a regional cold wave.
Fire and safety inspections across China
A fire occurred in a steel mill at Hubei on Thursday with a death toll of seven personnel and damages to five rolling pieces of machinery.
Due to the unfortunate incident, some market participants had speculated on a stricter new round of safety inspections for steel mills across China.
This created some volatility in the market, which played on trade participants’ fears over more stoppage warrants being issued which may drag down iron ore demand in the near term.
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Source: FreightInvestorServices
