Chinese futures rallied on better steel margins, which prompted more mills to ramp up production.
The most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for September delivery, hiked by 2.14% to RMB 645.50 per tonne at Wednesday
However, the steel rebar contract on the Shanghai Futures Exchange was mostly flat throughout the session before ending with a small gain of 0.26% to RMB 3,464 per tonne.
According to Tivlon Technologies, the steel margins have improved over the past 15 days, which prompted the mills to use high grade ores to ramp up their production.
Besides the high grade ores, the buying interest for medium grade ores also increased due to the supply tightness among port stocks.
However, the data analytics firm did not rule out that the demand surge for high grade ore will last for long, as the steel margins might narrow again with rising utilization rates from blast furnace and electric arc furnaces.
Higher truck sales in April
China’s sales of heavy truck reached a historic high in April, up 50% on-month, and up 52% on-year to 180,000 units.
The uptick was attributed to pent-demand for construction activities after the pandemic lockdown, and the full recovery of heavy truck production to meet the high construction order demand.
This suggested that the Chinese economy is recovering from detriment effect of the pandemic, especially for the construction sectors, which prompted a spike of rebar steelmakers margins to $56/mt in April, up 60% on-month. DCErebarShanghai Futures ExchangesteelTivlon Technologies