UPDATE 1-Chinese steel prices climb after bank liquidity boost

UPDATE 1-Chinese steel prices climb after bank liquidity boost

© Reuters.  UPDATE 1-Chinese steel prices climb after bank liquidity boost© Reuters. UPDATE 1-Chinese steel prices climb after bank liquidity boost

* Market sentiment lifted as China cuts bank reserve requirements

* Price hiking at spot market also fuelled futures prices

* Analysts warn long-term economic pressures remain (Adds content and updates closing prices)

BEIJING, April 18 (Reuters) – China’s steel futures climbed on Wednesday, marking their biggest daily gain in two weeks, as sentiment was boosted after the country’s central bank said it would cut down the cash lenders hold as reserves.

The People’s Bank of China late on Tuesday unexpectedly said it would cut the reserve requirement ratio (RRR), the amount of cash that most commercial and foreign banks must hold as reserves to pay back medium-term lending facilities, by 100 basis points for most commercial banks. cut in RRR helps to relieve pressure in capital markets and boost optimism over the macroeconomy,” said Xu Bo, analyst at Haitong Futures.

The most-active construction rebar futures on the Shanghai Futures Exchange SRBcv1 closed 1.7 percent higher at 3,446 yuan ($548.37) a tonne on Wednesday, standing at their strongest one-day advance in two weeks.

Prices for steel-making raw materials also climbed. Iron ore contracts for September delivery DCIOcv1 jumped 2.1 percent to 449 yuan a tonne, slightly stepping back after reaching their biggest intraday gain since early January during early trade.

The most-traded coke futures on the Dalian Commodity Exchange DCJcv1 surged 4.8 percent to 1,851 yuan a tonne. Coking coal prices rose 3 percent to 1,149 yuan a tonne.

The pick-up in metal prices was also boosted by an increase of steel billet rates and active trading at physical market, easing fears over sluggish demand.

Average billet prices rose 30 yuan to 3,490 yuan a tonne in top steel-making city Tangshan on Tuesday, with prices of some finished products in the city also seeing an increase, according to data from Mysteel consultancy.

Some analysts and traders, however, warned that the market pick-up may be short-lived.

“Despite the RRR cut, downward pressure on the economy remains… and the slowdown in infrastructure investment is unchanged. That means curbs on long-term steel demand are still there,” said Xu. futures said in a note in Mandarin that pressures hanging over iron ore and steel remain due to a slowing destocking process and environmental crackdown at steel mills.

Spot rebar prices edged up 0.03 percent to 4,111.8 yuan a tonne on Tuesday, according to Mysteel.

Iron ore for delivery to Qingdao port .IO62-CNO=MB rose 0.6 percent to $64.51 a tonne on Tuesday, according to Metal Bulletin.

($1 = 6.2841 Chinese yuan)

Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.