China Steel Futures Rise on Demand Optimism
Chinese steel futures hit their highest in nearly two months on Monday on signs of a recovery in demand, and as policymakers worldwide rolled out more stimulus measures to cushion global economies reeling from the coronavirus pandemic.
The U.S. Federal Reserve cut interest rates by 100 basis points on Sunday, in line with a global policy effort to stave off a steep economic downturn as increasing lockdowns and travel bans hit businesses across the globe.
The central bank of China on Friday cut the cash that banks must hold as reserves for the second time this year, releasing $79 billion to help its coronavirus-hit economy.
China accounts for more than half of the world's steel output and is the biggest exporter of the material widely used for manufacturing and construction.
Construction steel rebar on the Shanghai Futures Exchange (ShFE) rose as much as 2.1% to 3,584 yuan ($511.74) a tonne, the highest since Jan. 21.
Hot-rolled steel coil, used in cars and home appliances, gained as much as 1.9% to 3,551 yuan a tonne, the strongest since Jan. 23. Stainless steel climbed 2.4%.
Prices remained supported as of 0230 GMT, more than 1% higher despite fresh data showing China's steel output rose 3.1% year-on-year in the first two months of 2020.
Sentiment across Chinese ferrous futures markets was generally upbeat, with iron ore leading gains among steelmaking raw materials, boosted by falling inventories at China's ports.
"With workers slowly returning to worksites (in China), there are growing expectations that steel mills will need to restock raw materials," said ANZ senior commodity strategist Daniel Hynes.
"And while total steel inventories climbed higher last week, stockpiles of rebar actually fell for the first time in several weeks," he said in a note, highlighting rising rebar prices.
(Reuters reporting by Enrico dela Cruz; Editing by Devika Syamnath)