Chinese iron ore extends gains as steel holds near 3-year high

Shanghai rebar steel futures cut early losses to end near a three-year high on Thursday, helping raw material iron ore extend gains to a fifth session in a row. Hopes of stronger infrastructure spending and property sales in China helped steel prices surge this week, but volatility is also high.
"The market is not very stable and everybody wants to wait and see how it will go next," said a Beijing-based trader of iron ore. The most-active rebar on the Shanghai Futures Exchange closed down 0.1 percent at 3,625 yuan ($526) a tonne, after falling as much as 1.5 percent early in the day.
In the previous session, the construction steel product peaked at 3,692 yuan, its highest since February 2014. Iron ore on the Dalian Commodity Exchange jumped 2.3 percent to end at 726.50 yuan a tonne. The contract touched 735 yuan intraday, not far below a record high of 741.50 yuan reached on Feb. 21. Physical demand in China for high-grade iron ore from top suppliers Australia and Brazil remains firm, said the Beijing-based trader, but not so for lower grade material.
"Because steel mills' profits are quite okay, they prefer higher-grade products," she said. "And now some domestic concentrate is coming out so that's why low-grade cargoes are not popular." The spike in spot iron ore to a 30-month high above $90 a tonne in February is encouraging Chinese miners shuttered years ago to resume operations, possibly tightening the market for marginal foreign suppliers to China.