Chinese rebar futures recovered from early losses on Friday and headed for their first weekly rise in eight, despite worries over softening demand in the world's top producer China. The most traded January rebar contract on the Shanghai Futures Exchange inched up 0.3 percent to 2,044 yuan ($329.22) a tonne by the close after two days of decline.
Steel strip prices in the country's top-producing region of Tangshan rose 30 yuan to 1,990 yuan a tonne, and billet prices rose to 1,780 yuan, traders said. Strip and billet are key barometers for the wider market. "The real demand remains weak, bringing down mills' running rates in Tangshan to the lowest since 2009. Prices are likely to be volatile at lower levels for a while," said Li Wenjing, an analyst with Industrial Futures in Shanghai.
"The market has lost confidence after going downward for such a long time." China's factory sector contracted by the most in 15 months in July as shrinking orders depressed output, a preliminary private survey showed on Friday, a worse-than-expected result that should reinforce bets the struggling Chinese economy will get more stimulus. Rebar futures are down by a quarter so far this year, forcing more mills to step up production cuts and reduce restocking of the raw material iron ore.
Iron ore futures on the Dalian Commodity Exchange fell 0.4 percent to close at 348.5 yuan a tonne. It posted the fourth weekly drop as increasing supply from top global miners and sluggish demand in major consumer China hurt the commodity. Brazilian mining company Vale SA said on Thursday it produced 85.3 million tonnes of iron ore in the second quarter, a record for the quarter and its second-highest ever quarterly output. It is on track to meet its 2015 iron ore production guidance of 340 million tonnes. Iron ore for immediate delivery to China's Tianjin port extended losses on Thursday, down 0.2 percent to $50.60 a tonne, according to the Steel Index.