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UPDATE 1-China steel, iron ore prices soar on bargain hunting
December 28, 2016 / 9:12 AM / 9 months ago

UPDATE 1-China steel, iron ore prices soar on bargain hunting

* Rebar technically supported at 2,846 yuan/t

* Concerns about slowing demand linger (Updating prices)

By Muyu Xu and Josephine Mason

BEIJING, Dec 28 (Reuters) - Chinese steel rebar and iron ore prices jumped nearly 3 percent on Wednesday as technical buying signals and bargain hunting spurred a recovery from a weeks-long sell-off, offsetting concerns about slowing demand.

The most-active rebar contract for May delivery on the Shanghai Futures Exchange rose 3 percent to settle at 3,015 yuan ($433.53) per tonne.

The one-month low of 2,846 yuan per tonne hit on Monday marked a support for the market, spurring bargain hunters to return as hedge fund and other speculative investors carried out year-end window-dressing.

Iron ore on the Dalian Commodity Exchange also jumped 2.6 percent to settle at 564 yuan a tonne.

“It’s hard to say how long it will last or how far it could go since the rebound is not supported by fundamental factors and is largely from the technical side,” said Liu Xinwei, steel analyst at Sublime Info.

Steel mills typically curb their output as the construction industry slows during the quieter winter months and ahead of the Chinese Lunar New Year holiday at the end of January.

Adding to that seasonal slowdown, analysts have said that widespread cuts in output in recent weeks due to government efforts to curb pollution have reinforced fears about waning needs for raw materials like iron ore and coking coal.

Supporting gains, worries about a liquidity crunch in the banking system have eased after fund injections by the central bank and progress resolving a bond scandal that rocked the market.

Some institutional investors had pulled cash out of commodities in recent months to shore up their reserves as lending rates soared.

The most-active coking coal futures on the Dalian Commodity Exchange settled up 1.8 percent at 1,183.5 yuan per tonne, after falling to the lowest since Oct. 18 on Tuesday.

Coke rose 2.6 percent to 1,567 yuan per tonne. On Tuesday, prices hit their weakest since Nov. 3.

$1 = 6.9545 Chinese yuan Reporting by Josephine Mason; Editing by Richard Pullin and Subhranshu Sahu

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