Strong industrial activity, profit lift China steel futures

BEIJING: Chinese steel futures advanced on Monday, with rebar and hot-rolled coil gaining more than 3%, lifted by attractive industrial profit margins and rising demand amid strong construction and manufacturing activity.

China's industrial profit surged 179% in the first two months from the year-ago period, data from the National Bureau of Statistics showed on Saturday.

Margins in the manufacturing sector jumped 219.5% on an annual basis while profit earned by ferrous smelting and processing companies soared 271% during the January-February period, according to the statistics bureau.

Apparent demand for five main steel products, including steel rebar and hot-rolled coil, rose 5.6% week-on-week, data from Mysteel consultancy showed.

"According to the usual practice, if daily turnover for construction materials stays above 200,000 tonnes for a week, it can be proved that peak demand season has come," Tang Chuanlin, analyst with CITIC Securities said in a note.

Construction rebar on the Shanghai Futures Exchange , for May delivery, gained as much as 3.3% to 5,005 yuan ($764.97) a tonne. It was up 2.29%, as of 0302 GMT.

Hot-rolled coil futures, used in the manufacturing sector, jumped 3.5% to 5,318 yuan per tonne.

Shanghai stainless steel inched up 0.7% to 14,430 yuan a tonne. Prices for steelmaking raw materials on the Dalian Commodity Exchange also gained.

Coking coal futures on the Dalian bourse surged 5.5% to 1,629 yuan a tonne.

Coke futures advanced 4.7% to 2,281 yuan per tonne.

However, analysts with Chang An Futures warned of price fluctuations as the May contracts are about to be delivered soon.

Benchmark iron ore futures opened more than 3% higher, and was trading up 2.6% at 1,102 yuan by 0302 GMT.

Spot prices of iron ore with 62% iron content for delivery to China were unchanged at $162 per tonne on Friday from the previous session, according to SteelHome consultancy.