China steel, iron ore jump to near 1-mth highs on restocking demand
Source: www.chinamining.org Citation: Reuters Date: May 02, 2017
Chinese steel futures climbed to their highest in almost a month on Tuesday, supported by restocking demand following a long holiday weekend that also lifted raw material iron ore.
Chinese markets were shut on Monday for the Labor Day holiday along with other markets in Asia.
It is still unclear whether the outlook for Chinese steel demand in May would be brighter than in April, said Helen Lau, analyst at Argonaut Securities in Hong Kong, when consumption turned out slower than many had expected.
China`s factory sector lost momentum in April, with growth slowing to its weakest pace in seven months as domestic and export demand faltered, a private survey showed.
The most-active rebar on the Shanghai Futures Exchange was up 2.5 percent at 3,144 yuan($456) a tonne by 0223 GMT. The construction steel product initially rose to its highest since April 6 at 3,160 yuan.
Iron ore on the Dalian Commodity Exchange jumped as much as 5.8 percent to 539 yuan a tonne, its loftiest since April 7, and was last up 4.8 percent at 534 yuan.
"After the holiday there`s a bit of restocking demand, that`s why you see steel prices come up quite substantially and it`s reflected in futures," said Lau.
It still remains to be seen whether Chinese steel demand would pick up pace this month, with market participants also closely watching Beijing`s efforts to tighten financial leverage which may impact the ability of Chinese steel mills to access loans, said Lau.
China must ward off systemic financial risks, and regulators must strengthen financial supervision and increase coordinated oversight of major financial institutions, Chinese President Xi Jinping said last week.
But underlying steel demand appears to remain firm, with steel inventory among traders continuing to drop, she said.
Stocks of five major steel products - including construction-used rebar - held by Chinese traders stood at 12.1 million tonnes as of April 28, down 6 percent from the previous week and the lowest since January, said Lau, citing data from Mysteel consultancy.
($1 = 6.8957 Chinese yuan)
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