Hot-rolled steel coil futures in China rose for a sixth straight session on Thursday, supported by falling inventories of the material used in making cars and home appliances, and boosted by a surprise growth in factory activity last month.
The most-traded contract for hot-rolled coil on the Shanghai Futures Exchange ended up 0.7% at 3,619 yuan ($514.14) a tonne, after climbing 1.5% earlier in the session to its highest since July 26.
Hot-rolled coil inventory in China had fallen to 2.04 million tonnes as of Nov. 29, the lowest since Jan. 18, data from SteelHome consultancy showed.
“Steel prices remained supported following the positive PMI data in November,” said Richard Lu, senior analyst at commodities intelligence firm CRU in Beijing, referring to the gauge of factory activity.
The PMI, or Purchasing Managers’ Index, bounced back to 50.2 in November, its highest since March, above the 50-point mark that separates growth from contraction on a monthly basis.
“We think there might be further improvement (in prices) because we are bullish about the market, especially for steel flat products,” Lu said.
Construction steel rebar fell 0.6% to 3,585 yuan a tonne.FUNDAMENTALS
- The most-traded iron ore contract on the Dalian Commodity Exchange edged down 0.5% in volatile trade after two days of gains.
- “Iron ore supply should normalise next year after a standout 2019,” ING analysts said in a note.
- Prices of the key steelmaking ingredient hit five-year highs in July, buoyed by supply disruption after a deadly dam burst in Brazil and weather-related issues that hit mine operations in Australia, as well as healthy demand in China.
- “Over the coming year, we expect a relatively firmer first-half and a softer second-half in Chinese iron ore demand, taking steel demand prospects from infrastructure and the construction sectors into consideration,” ING analysts said.
- Benchmark spot 62% iron ore for delivery to China gained 0.6% to $90 a tonne on Wednesday.
- Dalian coking coal shed 0.1% and Dalian coke slipped 0.2%.
- Shanghai stainless steel futures fell 0.4% amid ample supply in China, dragging prices of key ingredient nickel lower.
Source: Reuters (Reporting by Enrico dela Cruz; Editing by Uttaresh.V and Tom Hogue)