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China steelmaking raw material futures rally, iron ore up for 6th day

Published 31/10/2016, 03:30 pm
© Reuters.  China steelmaking raw material futures rally, iron ore up for 6th day

* Coke hits more than 3-year peak, rebar climbs to 2-month high

* Steel raw material prices buoyed by tight supply, firm demand

* Firm demand for steel flat products may last until Nov -CIEC

SHANGHAI, Oct 31 (Reuters) - Dalian iron ore prices extended their winning streak to a sixth session on Monday and coke futures hit a more than three-year high, as tight supplies and firm demand in top consumer China underpinned prices of the steelmaking raw materials.

However, the sharp spike in prices of the commodities, that last week rose by the most in six months, spurred caution among Chinese mills amid relatively smaller gains in steel futures.

"Raw materials sustained the rally, lifting mills' production costs. Rebar producers are not enjoying any profit now, but demand for steel flat products remained strong, which may last until November," said Xia Junyan, investment manager at Hangzhou CIEC Trading Co in Shanghai.

Xia added that mills are currently making a profit of about 300 yuan ($44.32) a tonne. That is steady versus September but down about 70 percent from this year's peaks in April.

The most-traded iron ore on the Dalian Commodity Exchange DCIOcv1 jumped 2.1 percent to 496 yuan by the midday break, after touching a high of 499.5 yuan a tonne earlier in the session, the loftiest since August 2014.

Coking coal DJMcv1 rose 2.8 percent to 1,298.5 yuan, while benchmark coke futures DCJcv1 surged 4.4 percent to 1,782.5 yuan, the highest since August 2013.

Both iron ore and coke surged more than 10 percent last week, the most since April.

Steel futures have made smaller gains, with the most-active rebar on the Shanghai Futures Exchange SRBcv1 adding only 3 percent last week. Prices are currently at 2,585 yuan a tonne, up 1.6 percent from Friday. It earlier hit a high of 2,613 yuan, the highest since Aug. 25.

Iron ore for delivery to China's Tianjin port .IO62-CNI=SI climbed 1.3 percent to $63.1 a tonne last Friday, the highest since April 29, according to data from The Steel Index.

($1 = 6.7697 Chinese yuan renminbi)

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