Chinese steel futures climbed to their highest in nearly two weeks on Wednesday, supported by strong demand in the world's top consumer where traders' steel stockpiles have fallen more than 40 percent from March. The strength in steel prices also lifted iron ore futures to a one-week high, before retreating, and comes as other commodities were under pressure from a deepening political crisis in Italy, cutting appetite for many risky assets from oil to copper.
The most actively traded October rebar contract on the Shanghai Futures Exchange closed up 0.9 percent at 3,644 yuan ($567), after peaking at 3,667 yuan, the highest since May 18. The price of rebar, a construction steel product, has climbed 16 percent from late March.
"Things are very, very solid in China," said a Singapore-based trader. "Every week the drawdown in steel stocks is very healthy." Stocks of rebar at Chinese traders stood at 5.65 million tonnes on Friday, down 42 percent from a five-year high in mid-March, according to data compiled by SteelHome consultancy. Construction activity in China is expected to be brisk this year as the government focuses on infrastructure building in its rural areas, the Singapore trader said.
The most-traded September iron ore on the Dalian Commodity Exchange dropped 0.9 percent to end at 455.50 yuan a tonne, after earlier scaling a one-week high of 469 yuan.
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