China steel, iron ore hold near recent highs on property hopes
Chinese steel and iron ore futures ticked lower on Monday but stayed near recent highs, supported by expectations that property sales in the world’s top steel consumer would remain strong despite Beijing’s efforts to tame the sector.
China’s top economic planning agency said on Sunday the government would control rapid flows of bank credit to the property sector to help contain risks. The country’s red-hot property market picked up pace in February after price gains slowed in the previous four months.
“The re-acceleration in new home prices last month raises concerns that Chinese policy is becoming increasingly ineffective at keeping a lid on property prices,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
The most-active rebar on the Shanghai Futures Exchange closed down 0.2 percent at 3,581 yuan ($519) a tonne. The construction steel product reached a three-year high of 3,692 yuan on Wednesday.
Iron ore on the Dalian Commodity Exchange was off 0.4 percent at 711.50 yuan per tonne, not far below a three-week peak of 735 yuan it hit on Thursday.
Both rebar and iron ore posted their biggest weekly gain in two months last week.
The price gains came after China last week said property sales surged in the first two months of the year despite government measures to cool the market.
The strong sales “ignited market confidence over steel demand from the property sector,” Citi analysts said in a note.
Citi upgraded its projection of China’s 2017 gross-floor-area new starts to a growth of 2 percent from a prior estimate of a decline of 8 percent “and we expect steel demand to follow a similar path”, the analysts said.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slipped 0.3 percent to $92.34 a tonne on Friday, according to Metal Bulletin. But the spot benchmark gained 6.5 percent last week, its biggest such gain since late November.
Source: Reuters (Reporting by Manolo Serapio Jr.; Editing by Joseph Radford and Sherry Jacob-Phillips)