China rebar snaps 4-day decline, iron ore hovers near record high
Chinese steel and iron ore futures rose on Monday, with rebar prices rising for the first time in five sessions, buoyed by market anticipation of some restocking demand and optimism over U.S.-Sino trade talks.
The most-active construction steel rebar contract on the Shanghai Futures Exchange gained 0.7 percent to end the session at 3,659 yuan ($541.33) a tonne. Hot rolled coil added 1.6 percent to settle at 3,624 yuan.
“There should be some (restocking going on). Steel traders and users usually do this restocking either before or after the holidays,” said Richard Lu, an analyst at CRU in Beijing. Lunar New Year was celebrated in China earlier this month.
But to what extent such restocking will support demand is uncertain, Lu added.
“If that (demand) is strong, I think prices will not drop, but I don’t think that is the case,” Lu said.
“A lot of (market participants) are still away, and some people are taking additional holidays, so the market in general is still quiet compared with the normal level.”
Lu said that the “positive outlook” for the U.S-China trade talks also lent some support to steel prices.
Chinese state media on Saturday expressed cautious optimism over the trade talks between the United States and China, a day after President Xi Jinping said a week of discussions had produced “step-by-step” progress.
President Donald Trump received an update on the talks on Saturday and said on Twitter that they were “very productive”.
CRU’s Lu, however, said he did not expect steel mills to buy raw materials, including iron ore, at higher prices at this time because doing so “could undermine their margins”.
The most traded iron ore on the Dalian Commodity Exchange extended last week’s gains with a 0.4 percent rise to 628 yuan, off the day’s high of 641.5 yuan.
Dalian iron ore has fallen about 4 percent since hitting an all-time high of 657.5 yuan on Feb. 12, but is up about 28 percent this year.
Most of iron ore’s gains this year came in the wake of a deadly tailings dam burst at top miner Vale SA’s iron ore operations in Brazil in January, which has sparked concerns over supply.
Coking coal dropped 1.1 percent to 1,258.5 yuan a tonne, extending its pullback after scaling a peak of 1,323.5 yuan hit a week ago, the highest in at least five years. Coke ended 0.4 percent higher at 2,068 yuan.
Spot iron ore for delivery to China SH-CCN-IRNOR62 was steady at $87.80 a tonne on Friday, according to SteelHome consultancy.
Source: Reuters (Reporting by Enrico dela Cruz; Editing by Joseph Radford and Rashmi Aich)