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China steel ends five-day winning streak on profit taking

Chinese steel futures fell for the first time in six trading sessions on Tuesday as investors booked some profits from recent gains spurred by hopes of a revival in demand from the construction sector and a drop in inventory levels.

Iron ore futures were flat amid growing concerns about the impact on demand from the world’s top steel producer from an escalating trade dispute with the United States.

The most-active rebar on the Shanghai Futures Exchange settled at 3,356 yuan ($534) per tonne, down 0.74 percent.

Along with hopes of a recovery in demand, production curbs in China’s key steel city of Handan had helped fuel buying in recent days as authorities sustained the fight against pollution.

Inventories of rebar, used in construction, among Chinese traders fell for a second straight week, ending last week at 9.1 million tonnes, after hitting their highest in five years in March at nearly 10 million tonnes, according to data from SteelHome consultancy.

Iron ore on the Dalian Commodity Exchange settled at 447 yuan per tonne, down 1 yuan from Monday’s settlement.

Stocks of iron ore at China’s ports reached a record high of 161.68 million tonnes on Friday, up 9 percent this year, according to SteelHome data.

“A supply-side disruption and positive economic data should support iron ore prices in coming days, despite the rising fears of a trade war,” ANZ Research said in a note.

On Friday, Brazilian environmental regulators ordered miner Anglo American Plc to halt operations in the country in the wake of a pipeline leak.

“This is likely to see the premium that high-grade iron ore commands over lower grades remain high for the foreseeable future,” ANZ said.

The mine was expected to produce 15 million tonnes of high-grade iron ore fines this year, the bank said.

Source: Reuters

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