SINGAPORE: China steel futures raised in nearly six weeks on Monday spurred by hopes demand in the world's No. 1 steel consumer and producer would bounce back next month and boost appetite for raw material iron ore.
Traders expect continuation in construction activity in China, and expectations of a change in Beijing's leadership during an annual parliamentary session in early March, may lead to measures that would boost steel demand.
The most-traded October rebar contract on the Shanghai Futures Exchange rose 1.4 percent to 4,284 yuan ($680) a tonne by the midday break, its biggest single-day gain since Jan. 17.
Rebar hit a session high of 4,286 yuan, its loftiest since Feb. 13.
"I believe a lot of traders and even steel mills are betting that the market will get better, for both steel and iron ore," said an iron ore trader in Shanghai.
China could ease liquidity conditions further to bolster its slowing economic growth and the country's Vice President Xi Jinping, widely viewed as president-in-waiting, that could announce policy measures supportive of growth, the trader said.
China earlier this month cut banks' reserve requirement ratio for the first time this year, joining global counterparts in easing credit conditions to boost its economy.
Sellers of imported iron ore in China lifted prices on Monday by at least a dollar per tonne, betting demand will continue to pick up.
Australian 63-grade Newman iron ore fines were quoted at $141-$143 a tonne and 61.5-grade MAC fines at $137-$139, while Brazilian 65-grade material were offered at $150-$152, said Chinese consultancy Umetal. All prices include freight costs.
Iron ore with 62 percent iron content edged up 0.2 percent to $139 a tonne on Friday, according to reference price provider Steel Index, marking a fifth straight day of gains.
But another Shanghai-based trader said most of the recent spot deals were between miners and traders, suggesting steel mills remain wary that the steel price gains would be sustained. "The market is still very much sentiment-driven at the moment," he said.
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