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UPDATE 1-Shanghai rebar posts best quarter in five on firm Chinese demand

Published 29/06/2018, 05:30 pm
© Reuters.  UPDATE 1-Shanghai rebar posts best quarter in five on firm Chinese demand

* Chinese demand for flat steel products steady

* But appetite for long products weaker as construction slows

* Dalian iron ore futures hit two-week high (Updates prices)

By Manolo Serapio Jr

MANILA, June 29 (Reuters) - Shanghai rebar steel futures climbed nearly 2 percent on Friday and marked their biggest quarterly gain since January-March last year, buoyed by strong Chinese demand even as signs of seasonally slower consumption emerged in recent weeks.

Stocks of construction steel product rebar had dropped for 14 straight weeks before rising last week as seasonal rains in China's southern region and hot weather in the north curbed construction activity.

The absence of any fresh buildup in trade tensions between the United States and its trading partners including China also supported quarter-end buying, although an analyst said volatility will remain high.

"The view is mixed. Some people are very cautious because of the complications (arising from the trade tensions), but some people believe that relatively healthy profitability at Chinese steel mills will support prices," said Kevin Bai, analyst at CRU consultancy in Beijing.

The most-active October rebar contract on the Shanghai Futures Exchange SRBcv1 closed up 1.9 percent at 3,807 yuan ($575) a tonne, after scaling a one-week high of 3,816 yuan.

Rebar gained nearly 15 percent in April-June, its biggest quarterly rise since the first quarter of 2017.

Hot rolled coil futures SHHCcv1 rose 1.4 percent to 3,926 yuan per tonne, and increased 16 percent for the quarter, the most since July-September last year.

While demand for construction, or long steel products, has slowed along with construction activity in China, the appetite for flat products such, as hot rolled coil, remains steady given a largely firm manufacturing industry, said Bai.

"The manufacturing sector is relatively steady, but infrastructure investment is slowing down so that impacts on construction as well," he said.

Iron ore on the Dalian Commodity Exchange DCIOcv1 advanced 1.6 percent to settle at 474 yuan a tonne, just off the day's two-week peak of 476 yuan. The price of the steelmaking ingredient rose 5 percent for the quarter.

Coking coal DJMcv1 rose 1.1 percent to 1,200.50 yuan a tonne and coke DCJcv1 jumped 3.1 percent to 2,117.50 yuan. Coke climbed 20 percent in April-June, its largest quarterly rise since January-March last year.

Spot iron ore for delivery to China's Qingdao port .IO62-CNO=MB dropped 0.2 percent to $64.44 a tonne on Thursday, the lowest since May 28, according to Metal Bulletin. The spot benchmark was down marginally for the quarter.

($1 = 6.6195 Chinese yuan)

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