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Chinese steel rebar price surprisingly gains 5.1 pct 

To many domestic traders’ surprise, Chinese screw threaded steel bar futures gained nearly 7 pct from the already high prices on Wednesday to the highest point since April 2014. This also pumped up iron ore pric more than 7 pct, and the advance marked the fifth consecutive day of gains for both steel and iron ore.


Traders are replenishing steel inventories on hopes firm demand will be sustained next year as China‘s manufacturing sector recovers and Beijing spends more on infrastructure projects.


Meanwhile, China’s government is keep putting forward environmental inspections to relive air pollution, which restricts output at steel mills, tighten the market.


"The reason why the steel market, especially deformed steel bar market, remains strong even though seasonally it‘s a weak period is mainly due to supply-side tightness," said Helen Lau, analyst at Argonaut Securities. "Also the macroeconomic momentum is different from the same period last year."


The most-traded deformed steel bar on the Shanghai Futures Exchange jumped as far as 3,428 yuan ($498) a tonne before trimming gains to close at 3,382 yuan, up 5.1 pct. Iron ore for delivery to China‘s Qingdao port rose 1.4 percent to $79.73 a tonne on Tuesday, according to Metal Bulletin. It touched a two-year high of $80.83 on Nov. 28.


Construction activity typically slows in China during winter, but analyst Lau said mills continue to lift steel output hoping prices will remain high as the economy mends.


Activity in China‘s manufacturing sector expanded at the quickest pace in more than two years in November and growth in its services sector accelerated to a 16-month high.


Coking coal rose 5.2 percent and coke jumped 6.7 percent."Iron ore is just a steel play. If the steel price is good that will support the iron ore price," said Lau. Soaring futures have lifted bids for physical iron ore cargoes, with the spot benchmark likely to cross $80 a tonne again.

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