Steel reinforcement-bar futures in Shanghai gained for the first time in six days as investors bought the building material because they expect high production costs to support the price.
Rebar for October delivery rose by as much as 0.9 percent to 3,992 yuan ($640) a metric ton on the Shanghai Futures Exchange, before trading at 3,975 yuan at 9:59 a.m. local time. The contract closed at 3,956 yuan yesterday, the lowest close for this contract since Jan. 11.
Iron ore has surged 75 percent from a near three-year low in September as China’s growth rebounded from a seven-quarter slowdown. Iron ore for immediate delivery was unchanged at $151.90 a ton yesterday, trading near 16-month high, according to data compiled by The Steel Index Ltd.
“Raw material costs will continue to provide certain support for rebar prices,” Wu Zhili, analyst at Shenhua Futures Co., said in a report today. “Any news on hurricane or transport problems in Australia is bullish for the iron ore prices.”
Severe Tropical Cyclone Rusty was bearing down on north- west Australia’s Port Hedland today, the world’s biggest bulk export terminal.
Still, gains will be limited due to high capacity in the steel industry and expectations that the Chinese government may announce curbs on the property markets during a legislative meeting next week, Wu said.
The average spot price for rebar fell 0.5 percent to 3,821 yuan a ton yesterday, according to data from Beijing Antaike Information Development Co.
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