Shanghai rebar creeps higher on China demand optimism

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Chinese rebar futures rose on Wednesday to their highest in four weeks, buoyed by fresh signs of increased government support for the troubled property sector and stimulus measures to shore up the ailing domestic economy.

Iron ore prices, however, remained range-bound.

The most-active January rebar contract on the Shanghai Futures Exchange SRBcv1 ended morning trade 0.3% higher at 3,823 yuan ($528.86) a tonne, after touching its highest since Aug. 29 at 3,856 yuan earlier in the session.

October rebar held firm at 3,961 yuan a tonne, its strongest daytime finish since Sept. 13, as traders bet that Chinese steel demand will remain strong or even increase further next month.

Construction activity in China is usually at its peak in September and October. This, along with positive headlines about intensified government support for property developers, has helped stabilise steel and iron ore markets.

China’s commercial hub Shanghai has vowed to strengthen efforts to promote delivery of residential houses and ensure the steady and sound development of the property market.

Meanwhile, embattled developer China Evergrande Group 3333.HK is working with a real estate investment and operations firm owned by the Shenzhen government to complete four property developments in the tech hub.

Still, traders tempered their optimism.
“Although consumption has improved compared with June-July, the rate of destocking has weakened,” Huatai Futures analysts said in a note.

Benchmark January iron ore on China’s Dalian Commodity Exchange DCIOcv1 shed 0.5% to 711.50 yuan ($98.43) a tonne. On the Singapore Exchange, the steelmaking ingredient’s most-active October contract SZZFV2 was down 2.% at $95.15 a tonne, as of 0709 GMT.

Restocking demand ahead of China’s Golden Week holiday from Oct. 1 kept losses in iron ore futures muted, analysts said.

Shanghai hot-rolled coil SHHCcv1 advanced 0.4%, while stainless steel SHSScv1 lost 0.3%.

Dalian coking coal DJMcv1 and coke DCJcv1 dropped 1.1% and 0.5%, respectively.

Source: Reuters