Iron ore futures jumped into bullish territory, underpinned by rising steel output in top producer China. The steelmaking ingredient also saw further positive sentiments over expectations of higher demand for the steelmaking ingredient ahead of the country’s Golden Week holiday, while hopes of more stimulus to shore up the country’s COVID-hit economy also lent support to iron ore prices.
On the Singapore Exchange, the benchmark October iron ore contract gained 2.8 per cent at US$98.35 a tonne.
In a similar trend, rebar and hot-rolled coil on the Shanghai Futures Exchange (ShFE) both climbed three per cent, while stainless steel rose 0.4 per cent.
Other steelmaking inputs also rose, with Dalian coking coal up 2.8 per cent and coke climbing 1.8 per cent.
According to industry data provider Mysteel, China’s daily crude steel output recovered further in the middle 10 days of September, with the volume touching a three-month high of 2.89 million tonnes on average. In addition, average daily crude steel output over the period was up 25,900 tonnes, or 0.9 per cent.
Mysteel attributed the rise in output in mid-September mainly to some blast furnace steelmakers resuming operations or steadily ramping up output after the previous production cutbacks.
Analysts also noted that traders and steel mills were expected to replenish their iron ore stocks ahead of the Golden Week holiday which commences in the first week of October.
Steel prices also rebounded from recent declines as China Development Bank, the country’s largest policy lender by assets, announced an increase in the number of infrastructure loans it would grant to local governments.
However, steel production recorded a decline on the global stage as steel production for the 64 countries belonging to the World Steel Association (worldsteel) stood at 150.6 million tonnes in August 2022, three per cent lower than the corresponding period of August 2021.
China recorded an output of 83.9 million metric tonnes in August 2022, up 0.5 percent on August 2021, to maintain its position as the world’s largest steel producer.
A breakdown of production by regions showed that Africa produced 1.3 million tonnes in August 2022, up 3.5 percent year-on-year; Asia and Oceania produced 112.6 million tonnes, down 0.2 per cent against August 2021. The European Union, which comprises 27 steel producing countries, produced 9.7 million tonnes, down 13.3 per cent year-on-year.
The Worldsteel data further showed that other non-EU members including Bosnia-Herzegovina, Macedonia, Norway, Serbia, Turkey, and the United Kingdom produced 3.6 million tonnes, down 18.6 percent compared to August 2021.
Meanwhile, the Middle East produced 3.2 million tonnes, up 34.2 percent. North America produced 9.6 million tonnes, down 5.4 percent, while South America produced 3.6 million tonnes, down 10.1 percent.
On the other hand, Russia & other Commonwealth of Independent States (CIS) including Ukraine produced 6.9 million tonnes, down 22.4 percent.
