Stronger Chinese rebar futures spurred gains in the raw material. As you may have known, Chinese iron ore futures touched a 10-week high on Thursday, providing further support to spot iron ore price, which hit its strongest since September.
On the Shanghai Futures Exchange, the most-traded rebar was off 0.4% at 3,814 RMB per tonne, but increased 4% this week, the most since early August.
“With steel futures in China continuing to rise, physical iron ore traders appear to be happy to chase price higher for the moment,” ANZ analysts said in a note.
China’s iron ore futures posted their biggest weekly increase in nearly five months on Friday, with coking coal futures marking their best week in a year.
On the Dalian Commodity Exchange, the most-actively traded iron ore closed up 1.5% at 513.50 RMB ($78) per tonne, after hitting 515.50 RMB, its strongest level since Sept. 14. The contract gained 9.4% this week, the most since end-June.
Iron ore for delivery to China’s Qingdao port surged 3.9% to $67.69 per tonne on Thursday, the highest since Sept. 20.
The spot benchmark has risen 8.1% so far this week, its biggest such gain since early July.
Coking coal climbed nearly 3% to a 10-week high of 1,343 RMB per tonne, and gained 12% on the week, the biggest such increase in a year.
As you all have known, stronger profit margins have been encouraging Chinese mills to boost output, at a time when cities in the northern part of the country have imposed restrictions on sintering to cut pollution during winter.
Mills across northern China have been ordered to reduce sintering output from this month through March.
But data from the China Iron and Steel Association said member mills produced steel at an average rate of 1.8017 million tonnes in the first 10 days of November, up 0.7% from the last 11 days of October.
Some northern Chinese cities failed to improve air quality by much last month, the government said on Thursday as it warned provincial officials to comply with stringent steps to clear the skies. Only four of 28 northern Chinese cities met their air quality targets in October, according to the data showed last week. ($1 = 6.5954 RMB)