China’s steel futures rebound as trade war worries ease
Chinese steel futures rebounded from five-week lows in late trade on Wednesday as concerns over the economic impact of a U.S.-Sino trade war subsided, helping lift prices of steelmaking raw materials, including iron ore.
Benchmark construction steel rebar on the Shanghai Futures Exchange rose 0.9% to 3,704 yuan ($539.60) a tonne, after two days of losses and touching 3,650 yuan earlier in the session, its lowest since April 8.
Hot rolled coil, used in cars and home appliances, gained 1% to 3,637 yuan a tonne.
U.S. President Donald Trump on Tuesday issued somewhat soothing comments, describing the trade war “a little squabble”, and said talks between the world’s two largest economies had not collapsed.
“The concern about trade tariffs is temporary and steel demand within China remains strong,” said Darren Toh, a data scientist with Singapore-based steel and iron ore data analytics company Tivlon Technologies.
“Steelmakers in China are still making profits, and demand is intact even as crude steel production remains high,” he said.
China’s crude steel production rose 12.7% in April from March to its highest monthly level on record, official data showed on Wednesday, bolstered by firm demand and good profitability in steelmaking.
Iron ore and other steelmaking ingredients ended a volatile session firmer.
The most-traded iron ore contract on the Dalian Commodity Exchange was up 1.2% at 660 yuan a tonne, after falling as much as 1.7% earlier in the session.
The benchmark has risen 48% so far this year mainly due to tightening supply following a tailings dam collapse and mine closures in Brazil.
Amid the supply shock, inventory of imported iron ore at Chinese ports has declined steadily in recent weeks.
On Tuesday, Brazilian iron ore miner Vale SA said it is considering doubling the output of its Carajas Serra Sul iron ore mine in the northern part of the country after 2020.
With steel inventory drawdown in China looking “healthy”, Tivlon’s Toh said iron ore prices would remain elevated.
“We maintain our view that June would see further upside in iron ore and steel as infrastructure demand remains intact,” he said.
Also rebounding from earlier losses, coking coal finished up 1.6% at 1,370 yuan a tonne while coke rose 1.5% to 2,140 yuan.
Source: Reuters (Reporting by Enrico dela Cruz; Editing by Rashmi Aich)