Steel prices rise ahead of the peak of the construction season

Iron ore futures in China were largely unchanged after hitting a three-week low in the previous session as the market expects demand for steel mills to pick up ahead of the peak of the spring construction season.

The best-selling iron ore contract on the Dalian Mercantile Exchange for delivery in May closed 0.1 percent lower at 593 yuan ($ 88.73) a tonne.

The contract lost 3.2 percent on Tuesday to reach 586 yuan, its lowest level since February 1, amid news that Brazilian crude steel exports were growing on average year-on-year despite the Weil tailings dam accident last month. ,

The spring period starting in March, following the Chinese Lunar New Year holiday, “is usually the peak season for demand for steel products,” said Zhao Xiaobo, an analyst at Sinosteel Futures in Beijing, adding that there should be a high concentration of construction sites starting from work in next month.

The most active steel rebar contract on the Shanghai Futures Exchange rose on a fourth day on Wednesday, climbing 0.2 percent to 3,715 yuan a tonne, while hot rolled steel rose 0.5 percent to 3,734 yuan a tonne.

However, profits were limited by high inventories. SH-TOT-IRONINV's total iron ore reserves in China's ports are currently 145.05 million tonnes, the highest level since September 21 last year, according to SteelHome.

“This could be due to the fact that some steel mills were forced to adhere to more rigid sintering frames in Tangshan,” ANZ wrote in a note, citing China's leading steelmaker in Hebei province.

Wednesday marks the first day that the Dalian Stock Exchange, whose iron ore futures trading volumes have been declining in recent months, allows selected foreign investors to trade the contract.

“I don’t think this will lead to significant changes in price movements, as key players in the industry have already been trading iron ore futures in Dalian since 2016,” said Darren Toh, a scientist with a Singapore-based steel and iron ore data analysis company. ... Tivlon Technologies.

Among other steelmaking raw materials, coking coal added 0.6 percent to 1,295.5 yuan a tonne, hitting a two-week high, while coke was down 0.2 percent to 2,122 yuan a tonne.

Physical coking coal markets remain “active as Chinese traders seek to secure premium coking coal production,” pushing prices up in Australia, ANZ reported.