May 8, 2018 / 7:38 AM / 2 months ago

UPDATE 1-China's steel raw materials extend gains on restocking bets

* Rebar inventories continue to fall

* Dalian coke touches two-month peak

* Rains to arrive in southern, eastern China (Updates closing prices and adds customs imports data)

BEIJING, May 8 (Reuters) - Steelmaking raw materials in China climbed for a second consecutive session on Tuesday, as investors continued to bet on re-stocking 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 world’s biggest iron ore buyer imported 82.92 million tonnes of the commodity in April, nearly flat from a year ago, but slipped 3.3 percent from March, data from China’s General Customs of Administration showed on Tuesday, suggesting environmental curbs at steel mills may have weighed on demand for raw materials.

The most-traded September iron ore contract on the Dalian Commodity Exchange closed 1.6 percent higher at 476 yuan ($74.80) a tonne on Tuesday.

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 climbed 1.6 percent to 1,248 yuan a tonne on Tuesday, but failed to reach a two-month peak touched in the previous trading session.

Coke rose 1 percent to 2,022 yuan per tonne and reached as high as 2,046 yuan, the strongest since March 9.

Prices for rebar on the Shanghai Futures Exchange settled lower on Tuesday amid dull trading on the spot market, dropping 0.5 percent to 3,637 yuan a tonne.

Physical rebar dropped 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 = 6.3634 Chinese yuan Reporting by Muyu Xu and Tom Daly; Editing by Tom Hogue and Sherry Jacob-Phillips

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