May 8, 2018 / 4:02 AM / 14 days ago

China's steel raw materials climb a 2nd day on restocking bets

* Rebar inventories continue to fall

* Dalian coking coal up 2 pct, coke touches 2-mth peak

* Rains to arrive in southern, eastern China

BEIJING, May 8 (Reuters) - Steelmaking raw materials in China climbed for a second consecutive session on Tuesday, as investors continued to bet on restocking demand at mills, robust downstream demand and rising steel production.

“Supported by China’s steel demand recovery, China’s steel plants increased their production to meet demand,” brokerage Argonaut said in a note. Rising steel output points to a positive demand outlook for iron ore and other raw materials against a backdrop of declining steel inventory, it said.

Crude steel production by major steel companies over April 10-20 increased 1.87 percent from the same period in the preceding month, with daily output reaching 1.91 million tonnes, according to China’s Iron & Steel Association.

Stockpiles of steel rebar have been declining since mid-March, when inventories were at a multi-year peak at 9.79 million tonnes, dropping to 6.71 million tonnes as of May 4, data compiled by SteelHome consultancy showed.

The utilisation rate at steel mills continued to climb last week. As of May 4, it was up 1.24 percentage points from the previous week to 68.92 percent, the highest since mid-November, according to data from Mysteel consultancy.

The most-traded September iron ore contract on the Dalian Commodity Exchange rose 1.5 percent to 475.5 yuan ($74.72) a tonne by 0254 GMT.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB gained 1 percent to $67.26 a tonne on Monday, according to Metal Bulletin, the highest in two weeks.

Coking coal prices were higher on Tuesday, jumping 1.9 percent to 1,252 yuan a tonne but not reaching a two-month peak touched in the previous trading session.

Coke rose 1.3 percent to 2,027.5 yuan per tonne and reached as high as 2,046 yuan, the strongest since March 9.

Prices for rebar on the Shanghai Futures Exchange were steady on Tuesday amid dull trading on the spot market. Before midday, rebar dropped 0.1 percent to 3,651 yuan a tonne.

Physical rebar fell 0.3 percent to 4,313.49 yuan a tonne on Monday, according to data from Mysteel consultancy.

China Meteorological Administration has issued rainstorm alerts over the weekend in southern and eastern China, with heavy rains expected to arrive in this week. Heavy rains could slow construction work and reduce demand for steel rebar.

$1 = 6.3638 Chinese yuan Reporting by Muyu Xu and Tom Daly; Editing by Tom Hogue

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