China's steelmaking raw materials extend gains on firm demand outlook
The price of steelmaking raw materials in China rose for a second session on Monday on optimism that steel mills will replenish stockpiles as steel production increases and as iron ore inventories at ports decline.
The utilisation rate at blast furnaces across the country picked up again last week to 69.89 percent, as of May 11, up 0.97 percentage points from a week earlier and at its highest since early November, data from Mysteel consultancy showed.
Meanwhile, iron ore inventories at 45 major ports in China fell nearly 1 percent last week to 158.76 million tonnes, although still not far from record levels.
“The fast pace of reopening at steel mills and falling inventories at ports indicate strong restocking demand,” said analysts at Orient Futures in a note.
The most-active iron ore futures on the Dalian Commodity Exchange rose 1.1 percent to 482.5 yuan ($76.14) a tonne as of GMT 0226.
Coke futures added as much as 2.6 percent during early trade to 2,089.5 yuan a tonne, thei highest since March 9, supported by tight supply concerns as Jiangsu province looks at shutting small coke plants to help tackle pollution.
Coking coal contracts for September delivery edged up 0.2 percent to 1,254 yuan a tonne.
However, Orient Futures warned about the fast pace at which steel production has resumed since the end of government-mandated output curbs during the winter heating season.
“If mills continue to keep up the speed of operations resuming, the market will see an oversupply which would then bring pressure on prices,” it said.
Daily crude steel output by major steel companies over April 20-30 stood at a record 1.91 million tonnes, up 7.1 percent from the same period in the preceding month, data from China’s Iron & Steel Association showed.
Shanghai benchmark rebar futures rose 0.4 percent to 3,666 yuan a tonne on Monday, lifted by a firm outlook on the spot market as major steel mills raise prices for some steel products for June delivery.
Physical steel prices rose on Friday after a five-day decline, up 0.4 percent to 4,293.84 yuan a tonne, according to data from Mysteel.
$1 = 6.3373 Chinese yuan renminbi | Reporting by Muyu Xu and Josephine Mason; editing by Richard Pullin