Steel futures were steady on Wednesday, while iron ore prices continued to tick higher. Mills are increasingly looking to manage costs as iron ore eats into steelmaking margins.
On the Shanghai Futures Exchange the January 2021 rebar contract closed CNY 4/tonne higher than Tuesday at CNY 3,778/t ($553/t). For hot rolled coil the January contract took over from October as the most traded and closed down CNY 4/t at CNY 3,934/t. The October contract closed CNY 4/t lower at CNY 4,033/t. In Tangshan, billet prices were flat at CNY 3,460/t.
The Kallanish KORE 62% Fe index gained $0.64/t to $127.17/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index increased $0.56/t to $139.98/dmt cfr, and the KORE 58% Fe index was up $0.16/t to $115.90/dmt cfr.
On the Dalian Commodity Exchange January 2021 iron ore settled up CNY 4.5/t at CNY 850/t, while on the Singapore Exchange October 62% Fe futures settled up $2.39/t at $121.98/t. The same contract for 65% Fe and 58% Fe futures settled up $2.12/t at $136.58/t, and up $1.14/t at $109.73/t respectively.
Iron ore markets are still being shaped by tight inventories for key products and firm demand. Temporary production restrictions in Tangshan and elsewhere have had very little impact on mill purchasing.
With iron ore strong and steel prices increasing more slowly, margins are again becoming tighter. That is pushing mills towards cost-saving products including lower-Fe and high-grade products, which have better inventories.