Chinese steel futures climbed to their highest in nearly seven weeks on Wednesday, supported by a sustained drop in inventories of the building material as seasonal demand gained steam. Steel consumption in China, the world's top buyer, is usually strongest in April and May when the construction sector is at its busiest time of the year.
Stockpiles of construction steel product rebar at Chinese traders had fallen 21 percent to 7.69 million tonnes on April 20 from a five-year high in mid-March, data compiled by SteelHome consultancy showed. "That represents the recovery in end-user demand," said Kevin Bai analyst at CRU consultancy in Beijing.
The most actively traded October rebar contract on the Shanghai Futures Exchange closed up 0.3 percent at 3,573 yuan ($566) a tonne, after earlier hitting its strongest level since March 9 at 3,594 yuan. The resumption in steel production after winter restrictions to prevent smog were lifted in mid-March is keeping price gains in check, said Bai.
China's average daily steel output rose last month to 2.39 million tonnes, the highest since September. "Supply is resuming and after the seasonal demand recovery, I think the supply and demand fundamentals will loosen again and that will pressure prices," said Bai.
Iron ore on the Dalian Commodity Exchange slid 1.6 percent to 467.50 yuan a tonne, after a five-day run-up that pushed the price to a one-month peak on Monday. Coking coal fell 1.4 percent to 1,165.50 yuan per tonne and coke slipped 0.2 percent to 1,931.50 yuan. Iron ore for delivery to China's Qingdao port dropped 0.6 percent to $67.26 a tonne on Tuesday, according to Metal Bulletin.
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