Chinese steel and iron ore futures closed higher for the first time in seven sessions on Thursday on expectation that the recent sell-off has reached its limit.
The most-traded steel rebar contract, for October delivery, on the Shanghai Futures Exchange recovered from an early fall to close 1.2 percent higher at 3,583 yuan ($561.19) a tonne. Iron ore futures on the Dalian Commodity Exchange rose 1.1 percent to 459.5 yuan a tonne.
Rebar fell in five of the previous six sessions and was unchanged on May 17, amid lukewarm demand in the spot market, while iron ore had slipped on all six previous trading days.
Spot steel product prices fell 0.5 percent to 4,276.22 yuan a tonne on Wednesday, a level not seen for nearly three weeks, data from Mysteel consultancy showed.
“Iron ore prices have already fallen to a low level… and the market thinks there is only limited room for prices to decline further,” analysts at CITIC Futures said in a note.
Iron ore for delivery to China’s Qingdao port had fallen for a fifth straight session on Wednesday, hitting its lowest since April 9 at $64.11 a tonne.
Other steelmaking raw materials also recovered slightly on Thursday.
Dalian’s most-traded coke futures closed up 0.3 percent at 1,992 yuan a tonne after plunging as much as 4.8 percent in the previous session. Coking coal was flat at 1,190 yuan a tonne.
“Mills are not active in replenishing their stockpiles at the moment, as they plan to restock when prices fall further,” said a Shandong-based coke trader. He declined to be identified as he was not authorised to speak to media.
Yaang Pipe Industry Co., Limited (www.yaang.com)