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UPDATE 1-China steel, iron ore futures climb more than 4 pct on hopes of demand pickup
April 28, 2017 / 7:45 AM / 7 months ago

UPDATE 1-China steel, iron ore futures climb more than 4 pct on hopes of demand pickup

* Expectations of restocking demand ahead of May 1 holiday

* Shanghai rebar still ended April lower

* Spot iron ore headed for worst month since May 2016 (Updates prices)

By Manolo Serapio Jr

MANILA, April 28 (Reuters) - Chinese steel futures jumped more than 4 percent to a three-week high on Friday amid expectations of a pickup in demand next month after a shaky start to what is typically a brisk consumption period.

Steel’s rally lifted futures for raw material iron ore, but are unlikely to reverse the sharp decline so far in April in spot iron prices, which are headed for their biggest monthly decline in nearly a year.

Shanghai rebar ended April lower due to 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 Labour Day holiday.

The most-active rebar on the Shanghai Futures Exchange closed up 4.4 percent at 3,115 yuan ($452) a tonne, just off the session’s peak of 3,116 yuan, its strongest since April 7. It dropped 3.2 percent for the month.

But the construction steel product gained 5 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 media.

The recovery in steel futures has boosted sentiment in the physical market, lifting spot prices, said Bai.

The most-traded iron ore on the Dalian Commodity Exchange jumped 4.5 percent to end at its session high of 521 yuan per tonne.

On Thursday, iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slipped 0.3 percent to $66.42 a tonne, 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 = 6.8969 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Christian Schmollinger)

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