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China's steel, iron ore rise on falling rebar stocks

China's steel, iron ore rise on falling rebar stocks
Issue Time:2018-06-29

* Market sentiment briefly lifted by declining inventory data

* Steel demand to be leaner in July -Analyst

BEIJING, June 28 (Reuters) - China’s Shanghai steel rebar futures rose on Thursday, moving away from a near four-week low as better-than-expected steel inventory data boosted sentiment despite concerns about weaker demand.

Weekly inventory data compiled by Steelsearcher.com, a Chinese E-commerce steel trading platform, showed a 2.4 percent decline in rebar stocks held by Chinese traders after a rise in stocks last week. Similar data from consultancy Mysteel is due for release later on Thursday.

“The market feared that stockpiles will continue to grow this week, since that would be a clear signal of weak demand. Now stocks went down, which means the breaking point for demand has not come yet,” said Sun Feng, senior analyst at Orient Futures.

However, he warned that Steelsearcher.com data did not cover traders country-wide.

“The overnight data may only temporarily lift market sentiment. People are still waiting to see the more representative figure from Mysteel consultancy,” Sun said.

Last week’s Mysteel data showed stocks of steel products rose by 110,000 tonnes to 10.1 million tonnes following 14 consecutive weeks of declines.

The most-active construction steel rebar futures on the Shanghai Futures Exchange rose 1.6 percent to 3,746 yuan ($566.58) a tonne as of 0230 GMT. Rebar had held around around 3,663 yuan a tonne for previous two days, its lowest since May 31.

Spot steel prices dipped 0.2 percent to 4311.91 yuan a tonne on Wednesday, Mysteel data showed.

“Demand for steel could become leaner in July when construction works typically halt due to a heatwave across the country,” said Sun.

The China Meteorological Administration expects the eastern provinces of Jiangsu, Anhui, Henan and Hubei to face heavy rains in the coming three days. The northern regions of Hebei and Inner Mongolia have issued high-temperature alerts.

Prices of steelmaking raw materials rose alongside steel.

The most-traded iron ore contract for September delivery added 0.7 percent to 466.5 yuan a tonne.

Dalian coking coal prices edged up 0.5 percent to 1,190.5 yuan a tonne, while coke futures gained 0.8 percent to 2,052 yuan a tonne.