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Chinese steel futures bounced back on Tuesday after posting big losses in the previous session, as the state council urged local governments to ensure smooth transportation of key production materials.
China’s State Council, or cabinet, said on Monday local authorities should “spare no effort” to unblock the transportation channels, and ensure freight logistics such as daily necessities, key agriculture, energy and raw materials.
Transportation has been disrupted recently amid the country’s measures to prevent the spread of COVID-19, resulting in higher steel product inventories at mills and with traders.
The banking and insurance regulator also pledged to offer financial support for cargo and logistics sector that were affected by the pandemic outbreaks.
The most-active steel rebar on the Shanghai Futures Exchange , for October delivery, jumped 2.2% to 5,035 yuan ($790.57) per tonne at close.
Hot rolled coils used in the manufacturing sector ended up 1.8% at 5,180 yuan a tonne. Stainless steel futures inched 0.4% higher at 19,555 yuan a tonne.
However, analysts are still cautious about downstream steel consumption as the ongoing outbreak continues to hurt demand. China’s auto sales dived nearly 12% in March from the same period a year earlier, according to the industry association.
Steelmaking raw materials on the Dalian Commodity Exchange were higher after steel hub Tangshan city lifted an overall lockdown.
Benchmark iron ore futures, for September delivery, surged 4.4% to 925 yuan a tonne. Spot prices of 62% iron ore, however, dropped $5 to $150.5 a tonne on Monday, according to SteelHome consultancy.
Coking coal futures, for May delivery, increased 2.7% to 3,231 yuan per tonne. coke prices advanced 4.1% to 4,148 yuan a tonne when market closed, after rising as much as 5.4% earlier during the session.
“Currently, molten iron output is increasing steadily, and coke inventory at mills are relatively low, there’s still restocking demand,” analysts with SinoSteel Futures wrote in a note.