MANILA: Chinese steel futures rose for a second straight session on Thursday, benefiting from a strong demand outlook for 2021 and supporting benchmark Dalian iron ore above the 1,000-yuan mark. Construction steel rebar on the Shanghai Futures Exchange ended daytime trading 1.7% higher at 4,175 yuan ($638.94) a tonne. Hot-rolled coil climbed 1.1% to 4,446 yuan a tonne.
Early gains pushed the benchmark contracts to their highest levels in nearly a week, with interest stronger of late in hot-rolled coil, the material used for car bodies and household appliances. The China Association of Automobile Manufacturers has projected a 4% rise in vehicle sales next year to 26.3 million units in the world's biggest market, thanks to supportive government policies and automakers' discounts.
Analysts said upbeat Chinese economic data released earlier this week also continued to support ferrous metals. The November factory output grew at the fastest pace in 20 months as consumer spending and exports rose. China's strong demand for steel products kept blast furnace capacity utilisation rates elevated over the last eight months, and explained what some analysts described as the country's voracious appetite for key steelmaking raw material iron ore.
The most-active May iron ore contract on the Dalian Commodity Exchange jumped 2.6% to 1,026.50 yuan a tonne. Iron ore's most-traded January contract on the Singapore Exchange gained 0.7% to $155.80 a tonne by 0704 GMT, recouping early losses.
China has produced 53 million tonnes more steel this year than in 2019, "enough to build an extra 1,000 (Sydney) Harbour Bridges", said Robert Rennie, head of financial market strategy at Westpac. Spot iron ore in China traded at $158 a tonne on Wednesday, SteelHome consultancy data showed, near an almost eight-year peak hit last week.
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