Steel futures in Shanghai jumped to a record after iron-ore prices surged to a nine-month high, with buyers in China stockpiling the raw material in anticipation of a shortfall in supplies.
Reinforcement bars, or rebars, for October delivery gained for a third day, rising as much as 2.6 percent, to 5,093 yuan ($773) a metric ton on the Shanghai Futures Exchange, the highest ever. The contract was at 5,077 yuan at the 11:30 a.m. break, up 5.5 percent this month. The May-delivery wire-rod contract rose 2.7 percent to 4,909 yuan a ton.
China is ramping up steel output as demand climbs in the world’s second-largest economy for houses, offices, autos and appliances. Costlier iron-ore and steel prices may contribute to faster inflation, which gained 4.6 percent in December after a 5.1 percent jump the month before.
“Raw-material prices continue to support steel prices,” China International Futures (Shanghai) Co. analyst Huang Huiwen said from Shanghai today. “Iron-ore supplies may further tighten as Chinese steel demand and production picks up.”
Baoshan Iron & Steel Co., China’s biggest publicly traded steelmaker, said on Jan. 11 it was raising prices for a second month as local demand increased. Anshan Iron & Steel Group raised product prices for February delivery, Xinhua News Agency reported Jan. 18.
The price of 62 percent-iron ore arriving at Tianjin rose to $185.70 a ton on Jan. 21, the highest level since April 21, according to the Steel Index, a data provider. Rebar inventories monitored by the Shanghai Futures Exchange fell to 17,259 tons last week, the lowest since August 2009.
Pilbara Mines
BHP Billiton Ltd., Rio Tinto Group and Fortescue Metal Group mine iron ore in the Australia’s Pilbara region, where a tropical low is headed and expected to increase to cyclone strength, the Bureau of Meteorology said yesterday. Pilbara is the country’s biggest iron-ore producing region.
Orissa, India’s largest iron-ore producing state, is considering banning exports to thwart illegal mining and increase local supplies. A decision is expected “soon,” state Mines Minister Raghunath Mohanty said on Jan. 21. The south Indian state of Karnataka barred exports last July.
China boosted steel output by 9.3 percent to a record in 2010, driven by demand from automakers and railway builders. Crude-steel production rose to 627 million tons last year, the National Bureau of Statistics said Jan. 20. China’s steel output may increase to 661 million tons this year, according to UBS AG.
“The strength in raw-material prices should ensure the continued upward momentum of steel prices,” said Huang. “The biggest risk to the market lies in China’s moves to rein in liquidity and property speculation.”
No comments:
Post a Comment