China's iron ore futures rose for a third day on August 21, soaring more than 6%, fuelled by concerns of shortages of high-grade iron ore and before curbs on futures purchases come into force.
The Dalian Commodities Exchange on August 18 said it will limit the daily purchases and sales of contracts for delivery in January and February to 6,000 lots since August 22. The January contract is currently the most active iron ore future on the exchange. Each lot is 100 tonnes of ore.
The most-active iron ore futures on the Dalian Commodities Exchange closed 6.6% higher to 596 yuan/t ($89.34/t) on August 21. The contract rose as high as 601 yuan, the highest level since March 20 this year.
Iron ore futures have climbed 10.8% over the past three sessions, the biggest three-day gain since the three days ended February 14, 2017.
Mills are churning out steel products with high-grade iron ore ahead of production curbs that are set to start before the beginning of the northern hemisphere winter.
China's top steel producing province Hebei said earlier this month it will impose capacity limits on steel mills in three cities, including city of Tangshan, during the winter season in an effort to tackle pollution.
The province also vowed last week to fulfil its capacity-cutting targets for this year in steel, cement, coal and glass by the end of September.
"Margins on long- and flat-products are good at mills, which supports them to keep full-load operation and purchase more raw materials even prices are hiking,"said a supply manager at state-backed steel firm in Henan.
Analysts estimated that profits on steel products are now 600 to 1,000 yuan/t.
The most-traded rebar futures on the Shanghai Futures Exchange rose 3.6% at 3,962 yuan/t.
Spot rebar prices rose 0.3% to 4,243.04 yuan/t on August 8, according to data on the Mysteel website.
Other raw materials also followed iron ore higher. The January coking coal contract edged up 0.4% to 1,472.5 yuan/t.
Coke futures on the Dalian Commodities Exchange rose 2.9% to 2,314 yuan/t.
The exchange also said on August 18 that it will adjust the margins on coking coal and coke to 12% from August 22.
(Writing by Zoey Yan Editing by Harry Huo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.