Wednesday, February 09,
Shanghai steel rebar futures rose to a record on Wednesday after Chinese traders returned from a week-long Lunar New Year holiday anticipating a pickup in demand.
The price rise comes on the heels of increasing cost of raw materials iron ore and coal ahead of an expected recovery in steel demand in top consumer China despite raising interest rates on Tuesday for the second time in six weeks.
“We’re in the time of year when traders build steel inventory, so while real demand is weak at the moment, traders are restocking through it expecting stronger demand in the following month,” said Graeme Train, analyst at Macquarie in Shanghai.
“I wouldn’t be surprised if steel prices continue rising. Chinese production is still below the run-rate that even more conservative forecasters are predicting for this year and as a result they’re probably still under producing steel so you’ll need to incentivize that production by having prices rise.”
The most active reinforcing bar, or rebar, contract for October delivery on the Shanghai Futures Exchange, was up 0.2 percent at 5,136 yuan a tonne by 0302 GMT, after touching an all-time high of 5,150 yuan earlier.
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