China's iron and steel market wobbled to find a direction on May 10 as spot trading continued to be dull, although analysts held onto a positive outlook for the world's largest steelmaking country.
The most-active construction rebar futures on the Shanghai Futures Exchange picked up 0.5% to 3,615 yuan/t ($567.96/t) after seeing a slight dip in morning session.
Spot steel products extended losses into a fourth session on May 9, down 0.4% at 4,291.24 yuan/t.
Benchmark Tangshan billet dropped 40 yuan/t to 3,550 yuan/t as traders took a cautious stance amid a tepid market.
"Chinese steel market is returning to a healthy 'new normal' as demand in Spring has emerged strong enough to simultaneously absorb increased production as winter restriction concludes … and will push steel prices back to their February peak and margins to multi-year highs," said brokerage Jefferies in a note.
Profit margins for rebar-making touched 608 yuan/t in April, up more than 40% compared with a month ago, while Jefferies had estimated rebar margins to hit a 10-year high of $134/t.
Iron ore futures on the Dalian Commodity Exchange struggled to find a direction, slipping less than 0.5% to 470 yuan/t.
Benchmark iron ore for delivery to China's Qingdao port .IO62-CNO=MB fell 0.3% to $66.46/t on May 9, according to Metal Bulletin.
Dalian's coke for September delivery climbed less 0.2% to 1,999 yuan/t. The most-traded coking coal futures gained 0.6% to 1,241 yuan/t.
"Seasonal momentum push from downstream demand is waning, while supplies from mills have been increasing. However, with the ongoing supply-side reform and environmental crackdown, output expansion would be restrained and margins could be guaranteed," said Xu Bo, analyst, Haitong Futures.
China's producer inflation went up for the first time in seven months in April, with the producer price index (PPI) up 3.4% in April, the National Bureau of Statistics said, bolstered by surging commodities prices.
Sources:sxcoal
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