Prices for seaborne iron ore strengthened further Wednesday, tracking stronger restocking needs by buyers eager to procure raw materials when the market is recovering.
Platts assessed the 62% Fe IODEX at $95/dry mt CFR North China, up $2.50/dmt CFR China on the day.
Improving steel margins and replenishing needs by end-users were cited as the main factors behind stronger trade levels, industry sources said.
A Singapore-based trader said mills were making an average margin of Yuan 100-200 for every mt of crude steel produced given the current steel price versus raw material costs.
A mill source in central China said he heard other mills were now approaching traders for spot materials as they think now is a good time to procure iron ore with prices low enough to be attractive.
The same mill source in central China said this strengthening would last until at least next week.
"If the mills do not buy now, they are worried that they may need to pay higher prices for seaborne iron ore when the price is recovering," said the mill source in central China.
The physical price of steel square billet in Tangshan fell Yuan 10/mt on the day to Yuan 2,800/mt ($454/mt) ex-stock Tangshan, a mill source in the region said.
Meanwhile, steel rebar futures firmed Wednesday, with the most liquid October contract in Shanghai last trading at Yuan 3,061/mt, up Yuan 4/mt from Tuesday, and settling at Yuan 3,061/mt, up Yuan 9/mt on the day.
Tangshan-based Yanshan Steel awarded its weekly billet tender at Yuan 2,819/mt ex-works Wednesday, Yuan 3/mt lower than the previous week.