By Manolo Serapio Jr
SINGAPORE, April 9 (Reuters) - Shanghai steel futures rose
for a third straight session on Tuesday amid signs that demand
in top consumer China is picking up, lifting iron ore prices to
near one-month highs as mills stocked up on the raw material.
Chinese producers increased daily output of crude steel to
2.072 million tonnes in the last 10 days of March from 2.064
million tonnes in the preceding 10-day period, industry data
showed on Monday, banking on firmer demand ahead.
Data showing benign Chinese inflation also supported
investor sentiment as it gives policymakers room to keep
monetary conditions loose to aid a nascent economic recovery.
The most actively traded rebar contract for October delivery
on the Shanghai Futures Exchange hit a session high of
3,861 yuan ($620) a tonne, a level not seen since March 28. It
closed up 1.1 percent at 3,847 yuan.
The price of rebar, a steel product used in construction,
has rebounded around 4 percent since touching four-month lows
last week, encouraging mills to restock on iron ore supplies,
albeit not aggressively, with rebar still 12 percent below this
'Steel demand is slightly better with most of the
construction projects resuming,' a Shanghai-based iron ore
'But some mills are keeping their iron ore inventory low
because they are not too confident about the steel market.
They're buying the minimum requirement to feed their furnace.'
Benchmark 62-percent grade iron ore rose 1.3
percent to $137.60 a tonne on Monday, its highest since March
13, based on data from information provider Steel Index.
The sale of an Australian MAC 61-percent grade iron ore
cargo at $137.88 a tonne, above the benchmark 61-percent index,
helped lift the spot price, traders said.
But another Shanghai trader said the price concluded at the
tender was at least $5 more than he had expected.
'I doubt if this price can be repeated. There may be some
buying interest from mills who are short of stocks, but I don't
see any interest at such a high price level,' he said.
A similar cargo of 61-percent grade Australian fines was
offered on the China Beijing International Mining Exchange
(CBMX) platform at $141.50 a tonne on Tuesday, with the best bid
at $138, traders said.
Nonetheless, the gains in Shanghai rebar futures helped
boost prices of iron ore swaps, with traders betting on further
increases in spot rates.
The May swap contract rose to $136 a tonne after
settling at $135.42 on Monday, while the June contract edged up to $131 from $130.75, traders said.
Shanghai rebar futures and iron ore indexes at 0731 GMT
Contract Last Change Pct Change
SHFE REBAR OCT3 3847 +41.00 +1.08
THE STEEL INDEX 62 PCT INDEX 137.6 +1.70 +1.25
METAL BULLETIN INDEX 139.86 +3.45 +2.53
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2033 Chinese yuan)
(Editing by Himani Sarkar)
Keywords: MARKETS IRONORE/
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