SHANGHAI: Shanghai rebar futures fell half a percent on Tuesday after rising for a fourth straight day amid persistent concerns over sovereign debt, while the healthy outlook for steel demand in China capped losses, with iron ore prices standing firm.
The most active January rebar futures contract on the Shanghai Futures Exchange reached 4,875 yuan ($763) per tonne on Tuesday, hitting the highest level in more than a week, before closing down 0.49 percent.
The China Iron & Steel Association expected steel demand in the world's top steel producer and consumer to remain robust in the second half of this year, as the country maintains huge investment to boost its industrialization and urbanization.
"It is not easy for the overall market to recover quickly from the European sovereign debt worries, and rebar didn't fall much as the consumption in second- and third-tier cities remained strong," said Zhang Chunzi, a broker with SDIC CGOC Futures in Beijing.
Rapid investment growth in the world's second-largest economy will continue to buoy steel demand, supported by the large-scale construction in social housing, railway and water conservancy projects.
China's leading steel mills including Baosteel and Wuhan Steel have announced plans to raise prices of their main products for September bookings, aiming to catch up with rising spot market prices and in anticipation of stronger demand next month.
China's spot iron ore prices stood firm this week, with a quotation for 63.5 percent Fe-grade iron ore fines standing unchanged at $183-186 per tonne, including freight, on Tuesday, Chinese industry consultancy Mysteel said.
Three major global indexes, tracking spot deals in China, mixed on Monday.
"The spot iron ore market is flat today, but the market sentiment is good and we see many inquiries on low-grade iron ore from steel mills," said an iron ore trader in coastal Shandong province.
The Steel Index's 62-percent benchmark fell for a fifth straight session by 20 cents to $175.7 a tonne, while a similar index by Metal Bulletin rebounded by 6 cents to $176.29.
Iron ore swaps cleared by the Singapore Exchange gained for almost all contracts on Monday, with the biggest gain of $3.06 for the September contract.
Copyright Reuters, 2010
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