DCE hikes despite output cut in Tangshan

Chinese futures rose on Friday from higher steel production, though output cut were issued in steel-making hub of Tangshan. The most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), rose by 2.59% day-on-day to RMB 633 per tonne on Friday. Similarly, the steel rebar contract on the Shanghai Futures Exchange also increased slightly by 0.88% to RMB 3,452 per tonne.   Doubts over output cut in Tangshan China’s largest steel-making hub, Tangshan had been asked by the authority to reduce blast furnace output by 13-33% from five mills in May, estimated at a total reduction of 520,000 mt per month. However, market participants doubted whether the Tangshan-based mills will fully comply to the order, as the previous production 20-50% cut of 22 mills at 3.3 million mt per month scheduled in April, only yielded a cut of 150,000 mt per month. Thus, Platts expects the country’s steel mills to increase production in May, due to better margins as domestic rebar and hot-rolled coil sales margins stabilized at around $64/mt and $19/mt respectively since mid-April.     China’s import rises in April China’s iron ore imports rose by 11.4% month-on-month to 95.71 million tonnes in April, according to the country’s General Administration of Customs. The higher import volume suggested that Chinese mills have recovered well from the pandemic and were rising production to meet more government infrastructure stimulus in the future. As such, China imported a total of 358.4 million tonnes of iron ore during the first four month of 2020, up 5.3% from 340.21 million recorded same period last year. Furthermore, the capacity utilisation rates of blast furnaces over 247 mills rose for a seventh straight week to 81.68% as of April 30, up from below 74% in mid-March, based on Mysteel’s data.