SHANGHAI, Jan 4 (Reuters) - Chinese rebar futures lost upward momentum on the first trading day of 2016, giving up early gains that came on higher spot steel prices as underlying demand remains weak.
Prices of billet, a semi-finished steel product that is considered an indicator for the market, rose 80 yuan to 1,600 yuan ($246) a tonne during the holidays. But gains have stalled on Monday, pressuring rebar prices, traders said.
"Contracting supply and low inventories have pushed up rebar prices after steep declines, but the outlook remains gloomy as demand has not picked up," said a spot trader in Shanghai.
Benchmark May rebar futures on the Shanghai Futures Exchange SRBcv1 steadied at 1,790 yuan ($275) a tonne at the midday break.
China's large and medium-sized steel mills suffered losses of 53.1 billion yuan in the first eleven months of 2015, the China Iron and Steel Association was quoted by the Xinhua news agency as saying on Jan. 2.
Iron ore, the key ingredient for steelmaking, has given up early gains as a global supply glut and shrinking demand in top consumer China is expected to weigh on the commodity in 2016.
The most-active May iron ore contract on the Dalian Commodity Exchange DCIOcv1 dipped 0.5 percent to 323 yuan a tonne by midday.
Last Thursday, spot iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI rose to a one-month high of $42.90 a tonne to finish the year, according to The Steel Index (TSI). In 2015, spot iron ore slumped nearly 40 percent.
TSI did not update prices during on New Year holiday.
Rebar and iron ore prices at 0346 GMT
Contract
Last
Change Pct Change
SHFE REBAR MAY6
1790
+1.00
+0.06
DALIAN IRON ORE DCE DCIO MAY6
323
-1.50
-0.46
METAL BULLETIN INDEX
43.57
+1.26
+2.98
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.5096 Chinese yuan)