DCE iron ore rises for third consecutive day

Dalian Commodities Exchange (DCE) iron ore rose for the third consecutive trading day on higher steel prices on Wednesday, 20 Nov 2019.

At the end of the afternoon session, the most active iron ore contract for January delivery went up slightly by 0.16% on-day to RMB 632.50 per tonne.

Meanwhile, the most-active rebar contract on the Shanghai Futures Exchange, for January 2020 delivery also increased by 2.40% on-day to RMB 3,676 per tonne.

Rising steel prices

The continuation rise of the futures market was linked to higher steel prices, where end-users were estimated to operate at the steel margins around RMB 200-500 per tonne.

The better margins varied across steel products that led to the rebound of iron ore prices and higher rebar futures. This was partly due to the winter production cut that caused steel supply to reduce and prompted steel prices to hike.

However, some trade participants were cautious over the rally, especially some physical traders and end-users whom were not in a hurry to procure cargoes due to lack of details over the winter output cut in China.  

Higher Capesize rates

Despite the skepticism of physical iron ore traders, Capesize rates have been rising recently on the back of healthy cargo list.

This was especially true in the Pacific market, where major miners were seeking for vessels to move iron ore cargoes from Australia to Qingdao, China.

In comparison to the firm Pacific freight market, the Atlantic market had faltered due to weak shipping demand in the Brazil to China route.

According to trade sources, there was lack of cargoes for end-November and early Dec loading which might imply limited Brazilian iron ores during the month of December.