Dalian Commodities Exchange (DCE) booked a gain on Monday on higher steel prices, as well as shutdown of coking plants that lifted iron ore prices.
The most active iron ore contract for January delivery rose by 3.34% on-day to RMB 665.50 per tonne by the end of the afternoon session. Similarly, the Tangshan billet prices jumped by RMB 30 on-day to close at RMB 3,480 per tonne on Monday.
Meanwhile, the most-active rebar contract on the Shanghai Futures Exchange, for January 2020 delivery followed the uptrend with a gain of 1.51% on-day to RMB 3,697 per tonne.
Iron ore prices jump on shutdown of coking firms
The 3% jump in DCE was impacted by the shutdown of 11 coking firms in the city of Tangshan due to failing to comply with environmental regulations.
According to trade sources, the eleven coking plants has expired their operating permission and no renewal and extension were granted by the city authority.
The suspension of the coking plants prompted trade participants to anticipated stricter enforcement of environmental policy ahead, which supported steel prices.
Strong crude steel consumption in China
Moreover, China is expected to consume over 930 million tonnes of crude steel by the end of 2019, up 6% on-year, due to strong domestic demand.
So far, the country had already consumed 781.53 million tonnes of crude steel during the Jan-Oct period in 2019, up 8.2% on-year. Thus, this left about 148.47 million tonnes of crude steel to be absorbed for remaining two months in the year.
This high crude steel consumption rate was attributed to China’s expanding economy and continued growth in fixed-asset investment despite geopolitical market uncertainty.