* Shanghai rebar, spot iron ore hit five-week high
* China's steel demand solid, continues to pick up - Morgan
By Manolo Serapio Jr
MANILA, Oct 14 Shanghai steel futures climbed to
a five-week high on Friday and posted their biggest weekly gain
since August amid solid demand that has kept production high and
boosted appetite for raw material iron ore.
Spot iron ore, helped by the firmer futures markets for both
steel and iron ore, also scaled five-week peaks and was on
course for its best week since late July.
Morgan Stanley estimates that China's implied apparent steel
consumption in September rose 12.5 percent from a year ago and
2.8 percent from the previous month. The investment bank said
the strong double-digit annual growth may be largely due to a
low base in September 2015.
"However, the month-on-month growth does suggest that demand
remains solid and continues to pick up as we are entering the
traditional peak season," Morgan Stanley analysts said in a
"We expect the near term steel price to be supported on
solid demand and higher raw material costs."
Rebar, a construction steel product, on the Shanghai Futures
Exchange closed up 2.2 percent at 2,399 yuan ($360) a
tonne. Earlier in the session, it hit 2,422 yuan, the highest
since Sept. 7.
Rebar posted a weekly gain of nearly 5 percent, the most
since early August.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI
rose 0.2 percent to $56.60 a tonne on Thursday, the highest
since Sept. 9, according to data from The Steel Index. The spot
benchmark was up 4 percent so far for the week, on track for its
biggest such gain since the last week of July.
China's iron ore imports reached 93 million tonnes in
September, the second highest on record, as healthy profits
pushed steel mills to ramp up steel output.
Chinese mills could not fully digest the strong imports
"resulting in stockpiling," Argonaut Securities analyst Helen
Lau said, with inventories of the raw material at major ports as
of Oct. 7 up 24 percent from a year ago.
"Steel production increases will be lagging behind iron ore
supply increases due to China's overcapacity reduction campaign.
As a result we expect the iron ore price to trade below
$60/tonne for the rest of the year," Lau wrote in a note.
The most-traded iron ore contract on the Dalian Commodity
Exchange climbed to a seven-week high of 445.50 yuan a
tonne on Friday, before closing up 2.9 percent at 438.50 yuan.
The contract gained almost 6 percent on the week, also the most
($1 = 6.6685 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Tom Hogue and