Rebar futures in China rose for a fifth consecutive session amid improving steel margins in the world’s top producer of the construction and manufacturing material.
The Shanghai Futures Exchange’s most-traded contract for the construction material, for delivery in January 2020, ended 0.6 percent higher at 3,556 yuan ($508.43) a ton, after climbing to 3,576 yuan earlier in the session, its strongest since Sept. 30.
“Steel margins remain on the upward trend and as it stands we are back to early May levels,” said Hui Heng Tan, research analyst at commodity broker Marex Spectron.
Margins have improved in the wake of declines in prices of feedstocks such as iron ore and coke. Spot prices of benchmark 62 percent iron ore slumped below $80 a ton last week, their lowest in more than nine months, amid tepid demand and easing concerns over supply.
Steel rates rebounded slightly after the sharp drop early this month as a result of the spate of environmental restrictions in China, Tan added.
Rebar inventory in China slid last week to the lowest in 10 months, based on data tracked by SteelHome consultancy.
Supporting the rebound in rebar prices, Tan said the latest construction data out of China was above Marex expectations. “We are now positive on downstream construction activities,” he said.
Further pollution-related curbs on some steel mills and demand-boosting raft of stimulus measures to shore up China’s slowing economy also helped lift steel prices. – Reuters