SHANGHAI, Sept 2: Chinese steel futures rebounded on rising hopes that the country’s economy is stabilizing after factory activity expanded at the fastest pace in more than a year in August, brightening the outlook for steel demand.
China’s official purchasing managers’ index (PMI) rose to 51.0 from 50.3 in July, the highest level since last April, boosting confidence that a revival of internal demand will be sustained in coming months.
Beijing has stepped up efforts to stem a sharp economic slowdown in the world’s second-biggest economy, quickening railway investment and public housing construction in a move that will drive steel demand.
Chinese steel mills and traders reported a pick-up in orders in August, with a big improvement from construction and infrastructure, prompting plans for higher steel production in September, Macquarie Research said in an Aug. 29 research note.
‘With orders looking strong, mills report that capacity utilization has pushed up in August … And mills are giving a strong signal that they plan to increase output into September,’ it said.
The most-traded rebar contract for January delivery on the Shanghai Futures Exchange rose 0.75 percent to 3,782 yuan ($618) a tonne by the midday break, after falling for two straight sessions. It rose for a third consecutive month in August with a 3.1 percent gain.
The final HSBC/Markit PMI also expanded for the first time in four months in August as domestic demand rebounded marginally. China’s economy has slowed in 12 of the last 14 quarters.
Stronger producing rates by Chinese steelmakers in September will encourage them to continue restocking the raw material iron ore and could drive up prices this week.
Iron ore with 62 percent grade <.IO62-CNI=SI> extended losses last Friday, dipping 0.4 percent to $137.7 a tonne, according to the Steel Index. The commodity rose 6 percent in August, its third consecutive monthly gain. Shanghai rebar futures and iron ore indexes at 0330 GMT
Contract Last Change Pct Change
SHFE REBAR JAN4 3782 +28.00 +0.75
THE STEEL INDEX 62 PCT INDEX 137.7 -0.60 -0.43
METAL BULLETIN INDEX 139.63 -0.67 -0.48
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.1195 Chinese yuan)
(agencies)
Follow our WhatsApp channel