December 10, 2012 / 5:07 AM / 5 years ago

Shanghai rebar hits 7-week high after China data

* Iron ore at near 3-wk top, more upside seen
    * China Nov iron ore imports biggest since Jan 2011

    By Manolo Serapio Jr
    SINGAPORE, Dec 10 (Reuters) - Shanghai steel futures climbed
more than 1 percent on Monday to their highest since October,
after fresh data boosted optimism that China's economic recovery
was gaining traction, boding well for demand for both steel and
its raw material, iron ore.
    China's industrial output grew at its fastest pace in eight
months in November, while its iron ore imports jumped 17 percent
to their largest since January 2011.
    The most active rebar contract for May delivery on the
Shanghai Futures Exchange hit a session high of 3,707
yuan ($600) a tonne, its loftiest since Oct. 23. 
    "This improving macroeconomic environment will put steel
mills in a better position after the Chinese New Year," said
Helen Lau, senior commodity analyst at UOB-Kay Hian in Hong
Kong, referring to the week-long holiday next February.
    "If this economic recovery becomes a trend, there must be
some pent-up demand after then."
    But slower-than-expected growth in China's overall exports
and flat imports in November took some shine off the weekend
factory data, although economists remain confident the economic
recovery story is intact. 
    "While the Chinese trade balance data did miss the mark to
the low side, on balance the signs have been positive from the
world's second biggest economy and today's result should do
little to deflate investor confidence that things are indeed
picking up," CMC Markets senior trader Tim Waterer wrote in a
note.
    Anticipation of a pickup in steel demand and low iron ore
prices prodded Chinese steel mills to restock iron ore last
month, with total imports rising to 65.78 million tonnes.
 
    "Chinese steel mills probably began restocking in October
and this continued in November, as they took advantage of low
prices to stock up," said Lau, adding that she expects imports
to remain high this month.
    "I think steel mills are using more imported iron ore, which
is cheaper as we can see from the drop in inventory of port
stocks."
    Benchmark iron ore with 62 percent iron content
.IO62-CNI=SI jumped more than 1 percent to $121 a tonne on
Friday,  according to Steel Index, the highest since Nov. 19.
    Sellers of imported cargoes in China increased price offers
by up to $2 per tonne on Monday, said Chinese consultancy
Umetal, on expectations of higher demand.
    "Mills are searching for cargo and the market is a bit
active today," said a Shanghai-based trader.
    The buying interest may last for one to two weeks amid
limited stockpiles at Chinese ports, which had fallen below 80
million tonnes for the first time since December 2010, the
trader said.
        
  Shanghai rebar futures and iron ore indexes at 0436 GMT
                                                                                                       
  Contract                          Last    Change   Pct Change
  SHFE REBAR MAY3                   3675    +19.00        +0.52
  PLATTS 62 PCT INDEX             122.25     +0.25        +0.20
  THE STEEL INDEX 62 PCT INDEX       121     +2.60        +2.20
  METAL BULLETIN INDEX            121.64     -0.10        -0.08
                                                                                                       
  Rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 
($1=6.2301 Chinese yuan)

 (Reporting by Manolo Serapio Jr.; Editing by Clarence
Fernandez)

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