Shanghai steel futures climbed to their strongest level in almost two months on Thursday, before ending nearly flat, as falling stockpiles at trader underlined strong demand in the world's top consumer. Steelmaking raw materials also jumped, with coking coal and coke prices similarly rising to their loftiest levels since early March. But the two, along with iron ore, pared gains at the close as steel prices came off.
Inventory of construction steel product rebar among Chinese traders fell for a sixth straight week to 7.13 million tonnes on April 27, data compiled by SteelHome consultancy showed. Rebar stocks have now fallen 27 percent from a five-year high of close to 10 million tonnes in mid-March. The most actively traded rebar contract on the Shanghai Futures Exchange rose as far as 3,733 yuan ($586) a tonne, the highest since March 7. It closed 0.1 percent lower at 3,673 yuan. Falling steel inventories had spurred a recovery in spot prices in China and prompted major steel mills this week to raise their selling prices by 2-3 percent, said Helen Lau, analyst at Argonaut Securities.
"The improved steel market has resulted in iron ore price recovery," Lau said in a note. Benchmark September iron ore on the Dalian Commodity Exchange ended 1.2 percent higher at 474 yuan per tonne, having hit a one-week top of 482 yuan earlier.
The price gains in iron ore come just ahead of China allowing foreign investors to trade in Dalian's iron ore futures starting on Friday. It would be the second commodity derivatives opened to overseas investors after China launched its crude oil futures contract in late March, as Beijing aims to boost its pricing clout for one of its top imports.