Shanghai steel futures extended gains to hit an eight-week high on Monday, after a monetary policy easing measure in China fuelled a rally driven by concerns about output curbs in the world's top steel producer.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 ended daytime trading 1.4% higher at 5,432 yuan ($839) a tonne after touching 5,532 yuan, its highest level since May 19.
Hot rolled steel coil SHHCcv1 climbed 1.4% to 5,828 yuan a tonne, after scaling 5,948 yuan, also a peak since May 19.
Stainless steel SHSScv1 jumped 0.6% to 17,305 yuan a tonne.
The People's Bank of China announced on Friday afternoon it would cut the banks' reserve requirement ratio by 50 basis points, effective from July 15, releasing around 1 trillion yuan to underpin an economic recovery that is starting to lose momentum.
Ahead of the PBOC announcement, Shanghai steel contracts were already supported by renewed chatter about production curbs as China stepped up efforts to reduce steel output to meet its carbon emissions goal.
Still, doubts linger if China could stick to the plan.
“Sooner or later the government is going to have to temper its ambitions of lower steel output in 2021 or risk dealing with an expanding speculative asset bubble,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Steelmaking raw materials on the Dalian Commodity Exchange were also firmer, with the most-active September iron ore up 1.5% at 1,188.50 yuan a tonne, off a session-high 1,213 yuan.
August iron ore on the Singapore Exchange SZZFQ1 rose 1.9% to $208.10 a tonne by 0708 GMT.
“The reality is it will likely take 6-9 months, if at all, for (the RRR cut) to impact real steel and underlying iron ore consumption,” Widnell said, adding that such excitement over the PBOC measure was likely to fizzle out soon.
Dalian coking coal DJMcv1 rose 2% and coke DCJcv1 gained 1%.
Source: Reuters
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
Please Contact Us at：
media@xindemarine.com
.gif)
