Chinese steel futures rose for a second straight day on Wednesday as a recent sharp fall in prices boosted demand, but prices for raw materials eased. The most active rebar on the Shanghai Futures Exchange gained 0.3 percent at 3,424 yuan ($545.40) a tonne by the close, moving further away from Monday's eight-month low.
Steel prices tumbled 7.4 percent last week, the biggest weekly loss since the end of 2016, as tepid demand and an escalating trade spat between the United States and China raised worries over the economic growth in the two countries. The steep fall in steel prices has encouraged buying from end users, said Jin Tao, an analyst with Guotai Junan Futures in Shanghai.
"Steel prices have already fallen too much and the current cost doesn't support prices to fall further. Steel trading has picked up this week and some traders have cleared their stocks," Jin said. Weaker profit margins at Chinese steel mills have weighed on raw materials, although Jin said the downside risk remains limited.
Dalian iron ore futures tumbled more than 3 percent in early trading to 427.5 yuan a tonne, hitting their lowest since June 2017, before retracing to be down 1.1 percent at 438.5 yuan a tonne by the close. Coke futures dropped for the fourth straight session, down 4 percent at 1,776.5 yuan a tonne by the close. It earlier tumbled to 1,764.5 yuan a tonne, the lowest since Nov 2017. Coking coal dropped 1.7 percent at 1,231.5 yuan a tonne. Iron ore for delivery to China's Qingdao port edged up $0.84 a tonne to $65.17 a tonne on Tuesday, according to Metal Bulletin.
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