China's iron ore futures gave up early gains and fell for a fourth session in a row, despite firm demand at steel mills who are ramping up output to cash in fat profits. Weekly utilisation rates at mills across the nation continued to rise this week as of April 26, up 0.55 percentage points from last week to 70.58 percent, data compiled by Mysteel consultancy showed.
Steel mills are dashing to churn out more products before low season for construction activities kicks in May, when southern China enters rainy season. Profit margins of steel-making at mills have climbed to over 700 yuan a tonne after a steep drop in November last year.
The most-active iron ore futures on the Dalian Commodity Exchange ended 0.3 percent lower at 618.5 yuan ($91.87) a tonne. Dalian coking coal slid 0.1 percent to 1,347 yuan, while coke prices fell 1.6 percent to 2,015 yuan. Some coke plants in top steelmaking province of Hebei were seeking to take advantage of increasing profit margins at mills by raising coke prices by 100 yuan a tonne. However, mills are reluctant to accept the higher prices as many of them were ordered to crimp more output in May, traders said.
Benchmark Shanghai rebar prices dipped 0.1 percent to 3,739 yuan. Inventory of steel products at Chinese traders continued to fall this week, but a slower pace. It reduced 611,300 tonnes from last week to 12.72 million tonnes, Mysteel data showed. Rebar stocks were at 6.73 million tonnes and hot-rolled coil stocks were at 2.08 million tonnes as of April 26.