MANILA: Ferrous futures in top steel producer China rose on Friday, with rebar hitting a one-week high and iron ore set for its third straight weekly gain, buoyed by signs of increased activity in the country’s construction sector and pre-holiday demand.
The most-active January rebar contract on the Shanghai Futures Exchange climbed as much as 1.9% to 3,787 yuan ($533.70) a tonne, its highest since Sept. 15.
The most-traded January iron ore on the Dalian Commodity Exchange ended morning trade 1.8% higher at 722 yuan ($101.75) a tonne. On the Singapore Exchange, iron ore’s benchmark October contract was up 0.1% at $98.35 a tonne.
Chinese steel mills have ramped up production this month, with their average daily crude steel output in 10 days until Sept. 20 hitting a three-month high of 2.89 million tonnes, according to industry data provider Mysteel.
“Activity in the physical market is also rising, as the industry prepares for the week-long National Day holiday at the start of October,” ANZ commodity strategists said in a note.
An improvement in domestic steel demand and some end-users building their inventories ahead of the holiday have trimmed stocks held by traders by 1.8% over Sept. 16-22 from a week earlier, Mysteel also said.
Analysts saw signs of increasing construction activity in China, with real estate developer Evergrande’s 668 projects having resumed construction, of which 606 were at normal construction stage. Hopes of more stimulus to shore up China’s Covid-hit economy also added to the buoyant mood.
China Development Bank, the country’s largest policy lender by assets, said it will increase the number of infrastructure loans it gives to local governments, while prioritising the needs of major economic provinces.
Shangai hot-rolled coil rose 1.2%, while stainless steel dipped 1.5%. Dalian coking coal and coke climbed 1.5% and 0.6%, respectively.