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China steel advances after two-day drop, lifts iron ore

Published 22/06/2017, 12:40 pm
© Reuters.  China steel advances after two-day drop, lifts iron ore

* Steel demand outlook shaky amid summer lull

* Coking coal outperforms, hits near one-month top

By Manolo Serapio Jr

MANILA, June 22 (Reuters) - Chinese steel futures rose 1 percent on Thursday, regaining ground after a two-day fall, although the outlook for demand in the world's top consumer remains weak amid the summer lull.

Hot weather and rains in China typically slow construction activity during summer, curbing demand for steel.

"Our view is that demand is entering a seasonally weak period but supply will remain quite high and that will put prices under pressure," said Kevin Bai, analyst at CRU consultancy in Beijing.

But Bai said spot steel prices could be affected by "short-term speculative behavior in the futures market" which had been quite volatile in recent sessions.

The most-active rebar on the Shanghai Futures Exchange SRBcv1 was up 1 percent at 3,090 yuan ($452) a tonne by 0222 GMT. The construction steel product fell over the past two days after touching a three-week high on Monday.

Tracking gains in steel, the most-traded iron ore on the Dalian Commodity Exchange DCIOcv1 rose 1.8 percent to 433.50 yuan a tonne.

That could help lift bids for physical cargoes in China, and sustain recent gains in spot prices.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB increased 0.7 percent to $56.82 a tonne on Wednesday, the strongest level since June 2, according to Metal Bulletin.

But steelmaking coal futures outperformed iron ore on Thursday. Coking coal on the Dalian exchange DJMcv1 was last up 3.5 percent at 1,052 yuan per tonne, after rising as far as 1,058 yuan earlier, its loftiest since May 26. ($1 = 6.8300 Chinese yuan)

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