Shanghai construction steel futures notched a fourth straight day of gains on Thursday as stable demand and shrinking stockpiles in top consumer China saw the ferrous complex avoid heavy losses seen in global equities and base metals markets.
The most traded steel rebar contract on the Shanghai Futures Exchange, for January delivery, rose 0.8 percent to end on 4,192 yuan ($603.54) a tonne, its highest close since September 10, while hot-rolled coil futures finished up 1.4 percent on 3,914 yuan a tonne. Ferrous complex fundamentals are strong, with downstream steel demand in China stable and inventories continuing to drop, said Zhao Xiaobo, an analyst with Sinosteel Futures in Beijing.
Stockpiles of steel products at Chinese traders fell by 370,000 tonnes to 10.3 million tonnes in the week to October 19, according to data compiled by consultancy Mysteel. Furthermore, China's spot steel prices are around 600 yuan a tonne higher than futures prices and the new national standard for rebar, to be introduced on November 1, will increase costs by 200 yuan a tonne, Zhao added.
Steelmaking raw materials rose sharply in Thursday's afternoon session, with iron ore on the Dalian Commodity Exchange also recording a fourth day of gains as it ended up 1 percent at 533 yuan a tonne, its highest close since March 7. Dalian coke gained 2.2 percent and coking coal closed up 2.3 percent. "This year tightness in the iron ore market looks likely to persist in the short term" ANZ wrote in a note on Thursday, adding that China's supply-side reform measures "should see demand for high grade ore remain high."