SINGAPORE – Shanghai steel futures rose to a record for a fifth day in a row on Friday as index-based spot iron-ore prices bolted to all-time highs on tight supplies and strong demand from top buyer China.
Chinese steelmakers are boosting production in anticipation of a seasonal pickup in demand over the next two months.
The most active reinforcing bar, or rebar, contract for October delivery on the Shanghai Futures Exchange was up 0,5% at 5 216 yuan a ton by 0201 GMT, after touching a peak of 5 226 yuan earlier.
The surge in rebar futures followed record levels reached by iron ore price indexes on Thursday.
Global miners Vale , Rio Tinto and BHP Billiton use the indexes in setting quarterly iron ore contracts, which analysts forecast may hit a record $165/t for 62% Australian fines, free on board, in the second quarter, according to a recent Reuters poll.
BHP, Rio Tinto, Vale as well as Australian iron ore producer Fortescue Metals Group "are shipping as much as they can" while shipments from No. 3 supplier India are crimped by an export ban in Karnataka and transport restrictions in Orissa, Commonwealth Bank of Australia said in a note.
India's Supreme Court is likely to rule on the Karnataka ban this month, which if lifted, could dampen the rally that has pushed up price indexes by 11% so far this year, after gaining more than 40% in 2010.
The Karnataka ban has been in place since last July, shrinking India's iron-ore exports for a sixth straight month in December.
Platts' 62% iron ore index rose $1,50 to $190,25/t, cost and freight delivered to China, on Thursday.
The Steel Index 62% iron-ore benchmark climbed $1,60 to $188 and Metal Bulletin's 62% gauge jumped $1,79 to $185,90.
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