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China steel, raw materials extend gains to hit multi-year peaks

Published 08/11/2016, 03:13 pm
Updated 08/11/2016, 03:20 pm
© Reuters.  China steel, raw materials extend gains to hit multi-year peaks

* Coking coal steadies after hitting record high

* China iron ore imports fall to lowest since February

* China steel exports lowest since March 2015 - ANZ

By Manolo Serapio Jr

MANILA, Nov 8 (Reuters) - Iron ore futures in China climbed more than 3 percent to trade near a two-year high on Tuesday as a sustained rally in steel prices backed demand for the raw material.

Other steelmaking commodities coking coal and coke also added to Monday's sharp gains, although coking coal came off peaks as investors paused after lifting the price of the fuel to a fresh record high.

The gains came despite data showing that China's iron ore imports last month fell to the lowest since February, which some analysts say may have been due to shipment disruptions rather than weak Chinese demand.

The most-traded January iron ore on the Dalian Commodity Exchange DCIOcv1 rose as far as 529.50 yuan ($78) a tonne and was up 3.5 percent at 527 yuan by midday. It touched 530.50 yuan on Monday, its highest since May 2014.

"Mills are making money, they're able to increase steel prices and sustain those steel prices," said a Shanghai-based iron ore trader. "They will continue to produce."

Spot iron ore prices have similarly rallied. Iron ore for delivery to China's Tianjin port .IO62-CNI=SI rose 3.2 percent to $66.80 a tonne on Monday, the highest since April 21, according to The Steel Index.

Construction steel product rebar on the Shanghai Futures Exchange SRBcv1 was last up 2.4 percent at 2,865 yuan a tonne. It touched 2,933 yuan earlier, its strongest since September 2014.

Data on Tuesday showed China imported 80.8 million tonnes of iron ore in October, the lowest since February and down 13 percent from the previous month. shipments from top supplier Australia remaining strong last month, the decline may have been due to "some issues with Brazilian exports," said ANZ commodity strategist Daniel Hynes.

"I suspect there's also been a little bit of destocking as well with the buildup in inventories at the ports over the past couple of months.

"While imports may continue to weaken slightly coming into the yearend, I think we'll find year-on-year hold up pretty well," said Hynes.

China's steel exports fell to 7.7 million tonnes from 8.8 million tonnes in September.

Hynes said the last time exports reached 7.7 million tonnes was in March 2015 and the drop may be due to stronger domestic steel demand.

"The short-term pickup in fixed-asset investment and infrastructure and real estate sector has certainly taken some of the steel that had been earmarked for exports," he said.

Dalian coking coal DJMcv1 was nearly flat at 1,465.50 yuan a tonne by midday after rising as much as 5.5 percent to a record high of 1,544 yuan. Coke DCJcv1 climbed as much as 6 percent to 2,075 yuan per tonne, its loftiest since February 2013.

Coking coal surged 10 percent on Monday to lead a broad rally in Chinese commodities from base metals to eggs. = 6.7785 Chinese yuan)

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