Steel futures in the China, the world's biggest producer of the manufacturing and construction material, climbed to the highest in more than two weeks on Wednesday on hopes that the Russia-Ukraine conflict will boost demand for Chinese steel overseas.
Russia, which is facing an unprecedented wave of economic sanctions from Western allies over its invasion of Ukraine, accounts for an estimated 10% of global steel trade, while Ukraine has a 4% share, according to Huatai Futures analysts.
The supply interruption will force some major buyers to seek alternative sources, and "currently only China can fill this huge market vacancy", they said in a note.
The most-active May contract for hot-rolled coil - steel used in car bodies and home appliances - on the Shanghai Futures Exchange rose 2.5% to 5,158 yuan ($817.08) a tonne, advancing for a third consecutive day to the highest since Feb. 11.
Shanghai construction steel rebar also climbed 2.5% to hit 4,893 yuan a tonne, the strongest since Feb. 14.
Prospects for increased domestic steel demand also supported prices, analysts said, as China's parliament begins its annual meeting on Saturday and is likely to unveil more stimulus to ease a growth slowdown.
Higher steel prices boosted interest in steelmaking raw materials, with Chinese iron ore and coking coal futures rising by more than 5% in morning trade.
The most-active May iron ore contract on China's Dalian Commodity Exchange surged as much as 5.9% to 764 yuan a tonne, the highest since Feb. 15.
On the Singapore Exchange, iron ore's front-month April contract jumped 1.9% to $150.90 a tonne.
Disruptions to iron ore exports from Russia and Ukraine have also reportedly prompted some European buyers to seek cargoes from other countries, potentially tightening global supplies.
Dalian coking coal surged as much as 5.7% to the strongest since Oct. 22. Coke climbed 4.9% to the highest since Oct. 27.
Comments
Comments are closed.