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UPDATE 1-Iron ore in China marks ninth weekly rise on steel strength

Published 25/08/2017, 05:24 pm
© Reuters.  UPDATE 1-Iron ore in China marks ninth weekly rise on steel strength

* Shanghai rebar gains for fourth week in five

* Brisk orders from infrastructure companies in China - analyst (Updates prices)

By Manolo Serapio Jr

MANILA, Aug 25 (Reuters) - China's iron ore futures cut gains on Friday after hitting a near five-month high, but still extended their winning streak to a ninth straight week, backed by firm steel consumption in the world's top user.

China's infrastructure push, spurred by its public-private partnership (PPP) projects to lure private investment in infrastructure and public utility projects, has boosted steel demand this year, fattening margins at construction steel producers to the biggest in years. most-active iron ore on the Dalian Commodity Exchange DCIOcv1 closed up 0.3 percent at 585.50 yuan ($88) a tonne. The contract rose as much as 3 percent to 601 yuan - near Tuesday's five-month peak of 609.50 yuan - gaining 5 percent this week.

The most-traded rebar on the Shanghai Futures Exchange SRBcv1 climbed 2.7 percent to 3,930 yuan per tonne. The construction steel product rose for the fourth week in five.

There's a possibility that steel demand from China's infrastructure sector could improve further, said CLSA analyst Daniel Meng in Hong Kong.

"We have seen an acceleration in orders from leading infrastructure companies for PPP projects," he said.

As steel consumption in China heads to the peak season from September onwards, prices and margins at producers should "remain very well supported," said Meng.

There's a potential rebar could hit 5,000 yuan a tonne if China goes ahead with a plan to curb output in key steel producing areas like Hebei province during winter, he added.

That should continue to support iron ore prices, with the spot benchmark closing in on $80 a tonne this week, a level last seen in April.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slipped 0.8 percent to $77.16 a tonne on Thursday, according to Metal Bulletin. The spot price, which touched a 4-1/2-month high of $79.81 on Monday, has lost 1 percent so far this week. ($1 = 6.6653 Chinese yuan)

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