Dec. 31 (Bloomberg) -- Steel reinforcement-bar futures gained in China, closing with the biggest monthly advance in almost three and a half years, after data showed that the country’s manufacturing expanded in December.
Rebar for delivery in May rose 1.8 percent to end at 3,988 yuan ($640) a metric ton on the Shanghai Futures Exchange, the highest closing price for the most active contract since July 10. Prices gained 14 percent in December, the most since July 2009, paring a second annual drop to 5.3 percent.
China’s economy may have rebounded in the final three months of the year after a seven-quarter slowdown as the government increased infrastructure spending and accelerated investment-project approvals. A purchasing Managers’ Index was at 51.5 in December, according to the final reading from HSBC Holdings Plc and Markit Economics today. That’s the highest level since May 2011, and compares with a preliminary figure of 50.9 on Dec. 14. A figure above 50 indicates expansion.
“Confidence over an economic recovery is driving up prices of steel and iron ore,” said Xia Junyan, a Shanghai-based analyst at Wanda Futures Co. Steelmakers are poised to replenish their inventories of iron ore to feed production, underpinning prices, Xia said.
Stockpiles of ore at China’s major ports, owned mostly by mills and traders, fell 3.3 percent to 71.32 million metric tons as of Dec. 21, the lowest since Sept. 10, 2010, according to data from researcher Beijing Antaike Information Development Co.
Ore with 62 percent iron content delivered to the Chinese port of Tianjin was unchanged at $139.40 a dry ton Dec. 28, after reaching the highest level since May 9 the day before, according to a gauge compiled by The Steel Index.
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