Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

Chinese steel prices climb after bank liquidity boost

Published 18/04/2018, 12:43 pm
© Reuters.  Chinese steel prices climb after bank liquidity boost

* Steel, coke, coking coal set for biggest intraday gains in weeks

* Market sentiment lifted as China cuts bank reserve requirements

* Analysts warn long-term economic pressures remain

BEIJING, April 18 (Reuters) - China's steel futures climbed more than 2 percent on Wednesday, on track for their biggest daily gain in three weeks, as market sentiment was boosted after the country's central bank announced it would cut the cash banks hold as reserves.

The People's Bank of China late on Tuesday unexpectedly said it would cut the reserve requirement ratio (RRR), the amount of cash that most commercial and foreign banks must hold as reserves to pay back medium-term lending facilities, by 100 basis points for most commercial banks. cut in RRR helps to relieve pressure in capital markets and boost optimism over the macroeconomy," said Xu Bo, analyst at Haitong Futures.

The most-active construction rebar futures on the Shanghai Futures Exchange SRBcv1 had gained 2.4 percent to 3,471 yuan ($552.17) a tonne by GMT 0158, set for their strongest one-day advance in three weeks.

Prices for steelmaking raw materials also rose. Iron ore contracts for September delivery DCIOcv1 jumped 1.7 percent to 447.5 yuan a tonne, on course for their biggest intraday gain since early January.

The most-traded coke futures on the Dalian Commodity Exchange DCJcv1 surged 4.5 percent - approaching their largest one-day move in 12 months - to 1,847 yuan a tonne. Coking coal prices rose 3.4 percent to 1,153 yuan a tonne.

However, some analysts warned the pickup in the market may just be temporary.

"Despite the RRR cut, downward pressure on the economy remains ... and the slowdown in infrastructure investment is unchanged. That means curbs on long-term steel demand are still there," said Xu. futures said in a note in Mandarin that pressures hanging over iron ore and steel remain due to a slowing destocking process and environmental crackdown at steel mills.

Spot rebar prices edged up 0.03 percent to 4,111.8 yuan a tonne on Tuesday, according to Mysteel consultancy.

Iron ore for delivery to Qingdao port .IO62-CNO=MB rose 0.6 percent to $64.51 a tonne on Tuesday, according to Metal Bulletin.

($1 = 6.2861 Chinese yuan renminbi)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.