China’s iron and steel market wobbled to find a direction on Thursday as spot trading continued to be dull, although analysts held onto a positive outlook for the world’s largest steelmaking country.
The most-active construction rebar futures on the Shanghai Futures Exchange picked up 0.5 percent to 3,615 yuan ($567.96) a tonne after seeing a slight dip in morning session.
Spot steel products extended losses into a fourth session on Wednesday, down 0.4 percent at 4,291.24 yuan a tonne, according to Mysteel consultancy data.
Benchmark Tangshan billet dropped 40 yuan to 3,550 yuan a tonne as traders took a cautious stance amid a tepid market.
“Chinese steel market is returning to a healthy ‘new normal’ as demand in Spring has emerged strong enough to simultaneously absorb increased production as winter restriction concludes … and will push steel prices back to their February peak and margins to multi-year highs,” said brokerage Jefferies in a note.
Profit margins for rebar-making touched 608 yuan a tonne in April, up more than 40 percent compared with a month ago, Mysteel data showed, while Jefferies had estimated rebar margins to hit a 10-year high of $134 per tonne.
Iron ore futures on the Dalian Commodity Exchange struggled to find a direction, slipping less than 0.5 percent to 470 yuan a tonne.
Benchmark iron ore for delivery to China’s Qingdao port .IO62-CNO=MB fell 0.3 percent to $66.46 a tonne on Wednesday, according to Metal Bulletin.
Dalian’s coke for September delivery climbed less 0.2 percent to 1,999 yuan a tonne. The most-traded coking coal futures gained 0.6 percent to 1,241 yuan a tonne.
“Seasonal momentum push from downstream demand is waning, while supplies from mills have been increasing. However, with the ongoing supply-side reform and environmental crackdown, output expansion would be restrained and margins could be guaranteed,” said Xu Bo, analyst, Haitong Futures.
China’s producer inflation went up for the first time in seven months in April, with the producer price index (PPI) up 3.4 percent in April, the National Bureau of Statistics said on Thursday, bolstered by surging commodities prices.
Yaang Pipe Industry Co., Limited (www.yaang.com)