Steel futures rebound, but iron ore falters on China demand woes
Chinese steel futures rose on Tuesday, buoyed by government efforts to relieve financial distress in the country’s troubled property sector, but iron ore prices fell on persistent concerns over waning demand for the steelmaking ingredient.
Top steel producer China’s property sector, which accounts for about a quarter of domestic steel demand, has been under the spotlight amid a widening mortgage-payment boycott on unfinished real estate projects.
Chinese regulators have stepped up efforts to encourage lenders to extend loans to qualified projects, moving to ease a turmoil that could add strain to an economy already hit hard by COVID-19 lockdowns.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 ended daytime trade 1.7% higher at 3,774 yuan ($559.37) a tonne, well off session-high 3,872 yuan but extending a rebound from a 19-month low on Friday.
Hot-rolled coil, which is steel used in car bodies and home appliances, climbed 1.4% to 3,755 yuan a tonne, bouncing off a 20-month low.
Stainless steel SHSScv1 edged up 0.1%.
“We’re quietly confident Chinese authorities won’t allow property developers who are ‘too big to fail’ to go bankrupt, avoiding any prospective risks of contagion to the country’s banking sector,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
But futures prices of steelmaking raw materials fell as the overall outlook for China’s steel demand remains clouded by COVID-19 risks and bad weather.
Coking coal dropped 2.6% on China’s Dalian Commodity Exchange, while coke shed 1.1%, reversing early gains.
Iron ore’s front-month August contract on the Singapore Exchange slumped 2.5% to $98.20 a tonne, as of 0724 GMT, while Dalian iron ore’s most-traded September contract dropped 1% to 656.50 yuan a tonne.
China’s plan to form a new enterprise to centralise iron ore importation and invest in developing mines, which could boost the country’s pricing power, has meanwhile gained momentum.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; editing by Uttaresh.V)