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China iron ore, steel bounce from multi-week lows; but gains seen fragile
October 11, 2016 / 3:47 AM / a year ago

China iron ore, steel bounce from multi-week lows; but gains seen fragile

* China’s economy showed positive changes in Q3 - Premier Li

* Slow iron ore restocking so far - trader

By Manolo Serapio Jr

MANILA, Oct 11 (Reuters) - Chinese iron ore futures rebounded from two-week lows on Tuesday, tracking similar gains in steel prices as more investors returned from a week-long break, but some traders say the upward momentum may be limited by slow physical demand.

Helping to boost sentiment, Chinese Premier Li Keqiang said the world’s No. 2 economy showed positive changes in the third quarter and the country’s debt risks are under control.

There has also been a diversion of funds from property markets to commodity futures, said Helen Lau, analyst at Argonaut Securities, amid sustained efforts by China to curb home purchases to temper rising prices.

The most-active rebar contract on the Shanghai Futures Exchange was up 3.2 percent at 2,319 yuan ($348) a tonne by midday. The construction steel product hit a three-week trough of 2,209 yuan on Monday when Chinese markets reopened after a week-long National Day holiday.

On the Dalian Commodity Exchange, the most-traded iron ore contract climbed 3.5 percent to 418.50 yuan, after touching a two-week low of 398 yuan in the prior session.

But a Shanghai-based iron ore trader said he hasn’t seen much restocking of the steelmaking raw material so far.

“People are just checking around for prices and we have not seen firm business on our side,” he said.

Chinese authorities this year have carried out frequent environmental inspections of mills that have forced producers to reduce or stop production for a certain period of time.

Beijing said on Monday that as many as 173 Chinese steel enterprises were found to have violated the country’s environmental rules during recent nationwide investigations into the industry.

But firmer ferrous futures had helped fuel a recovery in spot iron ore prices after dropping last week for a sixth week in seven.

Iron ore for delivery to China’s Tianjin port .IO62-CNI=SI jumped 2.6 percent to $55.80 a tonne on Monday, according to The Steel Index, after falling on Friday to the lowest since July 1.

$1 = 6.6685 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Richard Pullin

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