China’s steel futures rose on Wednesday on optimism about demand prospects in the world’s top metals consumer, while low domestic stockpiles also lent support.
The most-traded construction steel rebar contract on the Shanghai Futures Exchange rose as much as 1.8 percent to 3,701 yuan ($527.29) a ton, heading for a fifth straight session of gains.
Hot-rolled coil, used in cars and home appliances, advanced 1.9 percent to 3,695 yuan a ton, while stainless steel gained 2.0 percent to 13,680 yuan a ton.
Steel prices remained resilient despite the seasonal weakness in downstream demand, particularly for rebar, as flooding in southern China and heavy rains across the country slowed construction activities.
“The market sentiment remains bullish, dictated by strong stock prices,” said Richard Lu, senior analyst at CRU consultancy in Beijing.
China’s stock markets have seen surging volumes and foreign inflows in recent days, pushing blue-chip shares to a more than five-year high, with retail investors rushing to join the bull market.
“It looks like market participants are still confident on macro-economic growth in the second half, and many think the short-term weather disruption will be compensated later,” Lu said.
China’s steel inventories remain low despite the build-up seen over the last two weeks.
Rebar and hot-rolled coil stockpiles have fallen more than 40 percent from this year’s peak, data from SteelHome consultancy showed. — Reuters
