Iron ore futures surged on Monday as Chinese steel mills ramped up production, fueling positive market sentiment. However, long-term demand concerns remain.
With the anticipation of stronger steel demand in the spring season, Chinese mills have been increasing output, providing support to the iron ore market. Additionally, expectations of government stimulus further lifted market confidence. China’s finance minister pledged to implement fiscal stimulus as soon as possible, as Beijing continues to introduce policy measures to counter weak domestic demand and economic pressure from the struggling property sector, a key consumer of steel.
Despite this optimism, reports indicate that some regions in China have begun reducing steel output in response to production curbs proposed by the National Development and Reform Commission (NDRC) to tackle overcapacity. More regions are expected to follow suit, potentially leading to a bearish outlook for iron ore futures. Furthermore, China’s steel industry is considering a compensation scheme to phase out outdated and inefficient facilities, according to Qian Gang, Chairman of Citic Pacific Special Steel Group. This move is part of the government’s broader effort to curb steel production.
Additionally, rising global protectionist measures on Chinese steel products may weigh on exports this year, potentially hurting demand for iron ore.
On the Dalian Commodity Exchange, the most-traded May iron ore contract rose 2.43pct to 779.5 yuan (USD 107.5) per ton, while coke and coking coal futures increased by 2.97pct and 1.13pct, settling at 1,595.5 yuan (USD 220) and 1,030 yuan (USD 142) per ton, respectively.
Meanwhile, on the Shanghai Futures Exchange, rebar futures climbed 1.23pct to 3,204 yuan (USD 442) per ton, HRC futures gained 1.28pct to 3,396 yuan (USD 468) per ton, and wire rod futures rose 1.44pct to 3,449 yuan (USD 476) per ton. However, stainless steel futures edged down 0.15pct to 13,390 yuan (USD 1,847) per ton.
1 USD / 7.25 yuan
| Material | Closing Price (in yuan) |
Difference from Night Session (pct) |
Difference from Previous Morning Session (pct) |
| Wire Rod | 3,449 |
1.44 |
1.74 |
| HRC | 3,396 |
1.28 |
1.33 |
| Rebar | 3,204 |
1.23 |
1.50 |
| Stainless Steel | 13,390 |
-0.15 |
0.30 |
| Iron Ore | 779.5 |
2.43 |
2.82 |
| Coke | 1,595.5 |
2.97 |
3.73 |
| Coking Coal | 1,030 |
1.13 |
1.94 |