3 Min Read
* Expectations of restocking demand ahead of May 1 holiday
* Shanghai rebar on track to end April lower
* Spot iron ore headed for worst month since May 2016
By Manolo Serapio Jr
MANILA, April 28 (Reuters) - Chinese steel futures rose for a fourth day on Friday, climbing to a three-week high, amid expectations of a pickup in demand next month after a shaky start to what is typically a brisk consumption period.
Steel's gains also lifted raw material iron ore futures, but are unlikely to sharply raise spot iron ore prices which are headed for their biggest monthly decline in nearly a year.
Shanghai rebar is on track to end April lower amid a slow start to a seasonally busy period for construction activity in China, but could improve in May.
"There are expectations that underlying demand will see some improvement after the May holiday so there should be some restocking demand," said CRU consultant Kevin Bai.
Chinese markets are shut on May 1 for the Labor Day holiday.
The most active rebar on the Shanghai Futures Exchange was up 2.8 percent at 3,067 yuan ($445) a tonne by 0240 GMT, after rising as far as 3,085 yuan earlier in the session, its strongest since April 7. It has dropped 3.2 percent for the month so far.
But the construction steel product has gained 5.2 percent this week on unconfirmed market talk of possible production curbs in areas surrounding Beijing, including top steel-producing province Hebei, ahead of a mid-May summit in the capital.
A steel mill in Hebei has not received any government notice yet on production cuts, said an official at the mill who declined to be named because he is not authorised to speak to the media.
The recovery in steel futures has boosted sentiment in the physical market, lifting spot prices, said Bai.
Firmer steel prices lifted iron ore on the Dalian Commodity Exchange by 1.6 percent to 506.50 yuan per tonne.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slipped 0.3 percent to $66.42 a tonne on Thursday, according to Metal Bulletin.
The spot benchmark has lost 17.4 percent this month, on course for its steepest monthly drop since May 2016.
"Narrowing margins for steel producers, rising iron ore supply and current high inventories are expected to push the iron ore price lower," Ric Spooner, chief market analyst at CMC Markets, said in a note. ($1 = 6.8931 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Christian Schmollinger)