* Hot-rolled coil outpaces rebar, hits five-week high
* Stronger auto market spurring demand for flat products
* Spot iron ore hits two-week peak
By Manolo Serapio Jr
MANILA, Oct 12 Chinese steel futures rose to
multi-week highs on Wednesday, supported by expectations that
traders would replenish stockpiles after a week-long holiday
amid brisk sales of cars and appliances.
Prices of flat steel products, used in transport and
appliances, have outpaced gains in long products, used in
"We are seeing better performance in the automotive and home
appliance sectors than construction and this is evidenced by
higher flat product prices," said Richard Lu, analyst at CRU
consultancy in Beijing.
China's auto market, the world's largest, has rebounded
strongly since October last year, when the central government
cut sales tax on vehicles with engines of 1.6 litres or smaller
to speed up slowing sales in a weakening economy.
The most-traded hot-rolled coil (HRC) contract on the
Shanghai Futures Exchange was up 3 percent at 2,709
yuan ($406) a tonne by 0317 GMT, after rising as far as 2,712
yuan, its loftiest since Sept. 2.
HRC is used to make cold-rolled coil steel that goes into
making car components and electrical products.
Rebar, used in construction, was up 1.3 percent at
2,338 yuan, after hitting 2,348 yuan earlier, its strongest
since Sept. 26.
A drag on construction demand for steel is China's renewed
efforts to restrict home purchases to rein in rising prices,
particularly in big cities.
A wave of restrictions imposed on housing markets in major
Chinese cities last week have unnerved some buyers and
developers, cutting the area of new homes sold in places such as
Beijing and Shenzhen by more than half during the week-long
National Day holiday.
Overall, steel inventory among Chinese traders was down 2.9
percent on Sept. 30 compared to the previous week, according to
There wasn't a lot of steel restocking that happened before
China's National Day break and it could happen now, with the
holiday over and inventories low, said CRU's Lu.
Gains in steel prices helped lift raw material iron ore on
the Dalian Commodity Exchange by 2.4 percent to 426.50
yuan per tonne.
Rising futures has increased activity in the physical market
this week, raising spot iron ore prices to a two-week peak.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI
climbed 1.3 percent to $56.50 a tonne on Tuesday, a level last
seen on Sept. 23, according to The Steel Index.
($1 = 6.6685 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Tom Hogue)