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Chinese steel futures traded higher on Thursday, as investors looked for government measures to uplift its economy reeling from a recent resurgence in COVID-19 cases.
The cabinet said on Wednesday China would use timely cuts to reserve requirement ratios and other policy tools to support the economy, as well as industries and small firms hit by the pandemic.
The most-active construction material steel rebar contract on the Shanghai Futures Exchange SRBcv1, for October delivery, gained 0.6% to 5,004 yuan ($786.00) a tonne when market closed.
Hot-rolled coils SHHCcv1 used in the manufacturing sector rose 0.6% to 5,160 yuan per tonne. The May contract of stainless steel futures SHSScv1 increased 0.8% to 19,830 yuan a tonne.
Benchmark iron ore futures on the Dalian Commodity Exchange DCIOcv1, for September delivery, were traded within tight range and closed up 0.1% at 902 yuan a tonne, though spot prices of iron ore with 62% iron content for delivery to China fell $2 to $152 a tonne in the previous session, according to SteelHome consultancy. SH-CCN-IRNOR62
Li Wentao, an analyst with Tianfeng Futures highlighted that some Chinese cities had recently relaxed their property sales policies.
“… Real estate sales are improving, and the market is mainly focusing on how long will it take to transfer (this momentum) to the property development sector.”
Li also expects steel demand to recover in the second half of the year and flagged that prices of steelmaking raw materials, such as iron ore, coke and steel scrap, were still high and squeezing mills’ profits.
Among other raw material prices, Dalian coking coal DJMcv1 leaped 1.4% to 3,242 yuan a tonne and coke prices DCJcv1 jumped 3.2% to 4,235 yuan per tonne.