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China steel, iron ore prices soar on bargain hunting

Published 28/12/2016, 04:00 pm
© Reuters.  China steel, iron ore prices soar on bargain hunting

* Steel rebar on track for best daily gain since April

* Concerns about slowing demand linger

By Muyu Xu and Josephine Mason

BEIJING, Dec 28 (Reuters) - Chinese steel rebar and iron ore prices jumped nearly 4 percent on Wednesday as technical buying signals and bargain hunting spurred a recovery from a weeks-long sell-off, offsetting concerns about slowing demand.

The most-active rebar contract for May delivery on the Shanghai Futures Exchange SRBcv1 was up 3.96 percent at 3,047 yuan per tonne at 0427 GMT. Prices were on track for their best daily gain since April.

The one-month low of 2,846 yuan per tonne hit on Monday marked a support for the market, spurring bargain hunters to return as hedge fund and other speculative investors carried out year-end window-dressing.

Iron ore on the Dalian Commodity Exchange DCIOcv1 also jumped 3.64 percent to 569.5 yuan a tonne.

"It's hard to say how long it will last or how far it could go since the rebound is not supported by fundamental factors and is largely from the technical side," said Liu Xinwei, steel analyst at Sublime Info.

Steel mills typically curb their output as the construction industry slows during the quieter winter months and ahead of the Chinese Lunar New Year holiday at the end of January.

Adding to that seasonal slowdown, analysts have said that widespread cuts in output in recent weeks due to government efforts to curb pollution have reinforced fears about waning needs for raw materials like iron ore and coking coal.

Supporting gains, worries about a liquidity crunch in the banking system have eased after fund injections by the central bank and progress resolving a bond scandal that rocked the market. institutional investors had pulled cash out of commodities in recent months to shore up their reserves as lending rates soared.

The most-active coking coal futures DJMcv1 on the Dalian Commodity Exchange were up 2.11 percent at 1,187 yuan per tonne, after falling to the lowest since Oct. 18 on Tuesday.

Coke DCJcv1 rose 1.7 percent to 1,554 yuan per tonne. On Tuesday, prices hit their weakest since Nov. 3.

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