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UPDATE 1-Shanghai rebar posts fourth weekly gain on stimulus hopes, Tangshan output cuts

Published 15/07/2016, 05:28 pm
© Reuters.  UPDATE 1-Shanghai rebar posts fourth weekly gain on stimulus hopes, Tangshan output cuts

* Chinese steel-related futures trade flat from previous session

* Analysts warn record high steel output to weigh on prices

* However, more economic stimulus may underpin demand (Updates close prices)

SHANGHAI, July 15 (Reuters) - Chinese steel futures steadied on Friday, but rose for the fourth week in a row, as better-than-expected macro-economic data spurred hopes that easing monetary policy would underpin steel demand in the world's top producer.

Prices have also climbed this week following the announcement of a mandated steel output cut in the key-producing region of Tangshan city in China between July 12-31. However, one analyst cautioned that the measures were not being enforced as strictly as expected, cooling the market. analysts expected that more potential stimulus from China will underpin steel demand, and the country's campaign to tackle a supply glut will cap growth in steel production, while some warned that the rally was too quick and outpaced the spot market.

"The new yuan loans is higher than expected and this will support steel demand and we haven't seen any big correction on steel futures after the rally, suggesting the outlook remains positive," said Yu Yang, an analyst with Shenyin & Wanguo Futures in Shanghai.

China's economy grew 6.7 percent in the second quarter from a year ago, slightly better than expected, and Chinese banks extended 1.38 trillion yuan in net new yuan loans in June as Beijing stepped up efforts to stabilise growth in the world's second-largest economy. Xia Jun, an analyst with GF Futures in Foshan, warned that there has been no big improvement in fundamentals and futures surged too quickly driven by expectation of supply interruptions in Tangshan and on fund buying.

The October benchmark rebar contract on the Shanghai Futures Exchange SRBcv1 closed up 0.6 percent at 2,527 yuan ($378.14) a tonne. Prices gained 4.6 percent this week, the fourth week of increase, and the longest weekly winning streak since a 10-week streak from February to April this year.

Rebar is up 25 percent from a year ago.

For steelmaking raw materials on the Dalian Commodity Exchange, coking coal DJMcv1 closed little changed and iron ore futures DCIOcv1 edged up 0.5 percent at 461.5 yuan a tonne. Coke futures DCJcv1 rose 1.5 percent.

Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI fell for the second day in a row, down 70 cents to $58 a tonne on Thursday, according to The Steel Index.

China's average daily crude steel output reached a record high of 2.316 million tonnes in June, government data showed on Friday, as rising prices and firm demand spurred mills in the world's top producer to churn out more of the alloy. ($1 = 6.6835 Chinese yuan)

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