Steel futures surge in China amid firm demand outlook

Source:Reuters-Global Times Published: 2017/8/17 18:38:39

Chinese steel futures jumped more than 2 percent on Thursday to end a four-day losing streak amid a firm outlook for demand in the world's top consumer, fueling a rally in steelmaking raw materials such as iron ore and coking coal.

Coking coal surged nearly 8 percent to hit a record high, while iron ore climbed as much as 7 percent.

The recovery in steel and iron ore futures followed a four-day slide after the Shanghai Futures Exchange hiked transaction fees and imposed trading limits to tame speculative trading.

Rebar prices in the physical market have fallen much more slowly than futures prices in the past four days, indicating that underlying sentiment remains bullish, said Richard Lu, an analyst at CRU consultancy in Beijing.

"The physical market has not completely collapsed. Traders did not sell their inventories with big discounts," said Lu.

The most-active rebar on the Shanghai exchange was up 2.12 percent at 3,809 yuan ($571) a ton during the afternoon trading after peaking at 3,860 yuan earlier.

Steel inventories among Chinese traders had been falling in an indication of strong end-user demand. As of August 11, inventories of rebar stood at 3.78 million tons, less than half of this year's peak of 8.4 million tons reached in February, according to data tracked by SteelHome consultancy.

Iron ore on the Dalian Commodity Exchange was last up 5.71 percent at 555 yuan a ton.

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