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China steel futures, iron ore rise on Nov factory activity surprise

Steel futures in China rose for a third consecutive session on Monday, as stronger-than-expected factory activity readings for November boosted sentiment.

China’s official Purchasing Managers’ Index (PMI) released on Saturday pointed to an unexpected improvement in its manufacturing sector in November, as demand picked up on Beijing’s stimulus measures.

Another private business survey released on Monday also showed total new orders and factory production remained at buoyant levels last month, expanding at the quickest pace in almost three years.

The most-active January contract for hot-rolled coil (HRC), which is used to make cars and home appliances, on the Shanghai Futures Exchange jumped as much as 1.9% to 3,622 yuan ($514.57) per tonne, the highest level since July 29. It closed up 1.6% at 3,609 yuan a tonne.

“It’s peak demand season for HRC at year-end,” said Tang Chuanlin, analyst with CITIC Securities.

Construction steel rebar on the Shanghai bourse gained 0.4% to 3,634 yuan per tonne.

Benchmark iron ore futures on the Dalian Commodity Exchange , for January 2020 delivery, climbed 1.2% to 653 yuan per tonne.

“There are signs that global economy is recovering and industrial products are expected to finish destocking cycle in December and start to restock,” Tang added.

Other steelmaking raw materials were mixed — Dalian coking coal rose 0.8% to 1,238 yuan per tonne, while Dalian coke fell 0.2% to 1,854 yuan per tonne.

Shanghai stainless steel futures, for February 2020 delivery, dropped 0.9% to 13,930 yuan per tonne.

Benchmark spot 62% iron ore for delivery to China stood at $89 per tonne on Friday, unchanged from the previous session.

Brazilian miner Vale SA said it would resume operation of the Viga concentration plant on Saturday after having halted operations for a few months. The resumption does not change the iron ore and pellets sales forecast for 2019 or the first quarter of 2020.

China’s central bank governor Yi Gang said in a signed article published on Sunday that Beijing would maintain “normal” monetary policy as long as possible since economic growth is still within a reasonable range and inflation is mild overall.

Source: Reuters (Reporting by Min Zhang and Dominique Patton; Editing by Muralikumar Anantharaman and Uttaresh.V)

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