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Shanghai rebar hits 7-1/2-year peak on firm demand

China’s Shanghai steel futures hit a 7-1/2-year high on Monday, supported by firm demand and expectations that the government will boost stimulus measures to support infrastructure projects.

Benchmark construction steel rebar contract on the Shanghai Futures Exchange touched 3,843 yuan ($573.01), its highest level since September 2011, and closed 1.4 percent higher at 3,829 yuan.

Hot-rolled coil, a manufacturing grade steel product, rises 1.7 percent to 3,752 yuan a tonne.

“The current fundamental situation of the steel market is better than for the same period in previous years, as inventories at steel mills and traders are at a low level despite increasing output,” said analysts at Jinrui Futures.

“Meanwhile, investors are expecting stable economic growth in China … and accelerated infrastructure construction, which will support steel demand being maintained at a high level.”

China’s state planner last week drew up a plan on its 2019 urbanisation, addressing an improvement of infrastructure projects in mid- and small-cities and an expansion of transportation systems.

Inventory of steel products at Chinese traders fell for a sixth week last week as of April 12 to 14.25 million tonnes, with rebar stocks at 7.67 million tonnes and hot-rolled coil at 2.24 million tonnes, according to data compiled by Mysteel consultancy.

With winter restrictions being eased in northern China, steel mills started to ramp up output. Utilisation rates at mills across the country rose to 69.48 percent last week, the highest level in nine months, Mysteel data showed.

Increased steel operations also helped to drive demand for steel-making ingredients.

The most-active coking coal futures on the Dalian Commodity Exchange rose 1.1 percent to 1,326 yuan a tonne, while coke prices advanced 2.1 percent to 2,050 yuan a tonne.

Iron ore futures edged up 653 yuan a tonne, not far off an all-time high record of 666 yuan.

Source: Reuters

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