Posted on 13 Apr 2022
Prices of ferrous derivatives in China rebounded strongly on Tuesday after the falls witnessed in several sessions previously, trading data shows. Industry pundits are wondering whether market sentiment might possibly be turning from bearish to slightly bullish.
On April 12, the most-traded October 2022 rebar contract on the Shanghai Futures Exchange, for example, closed the daytime session at Yuan 5,035/tonne ($790.5/t), recovering by Yuan 108/t or 2.2% from Monday's settlement price, ending the prior three days' fall.
The most-traded iron ore contract on the Dalian Commodity Exchange (DCE) for September delivery demonstrated a more marked recovery, with the contract closing the daytime session on Tuesday at Yuan 925/dmt, up Yuan 39/dmt or 4.4% from Monday's settlement price, nearly offsetting the previous day's slump.
"The market now expects that the domestic macroeconomy will perform relatively positively this month, and that capital liquidity might remain generally ample, with more stimulatory monetary policies expected. This will enliven the overall economy and industrial activities," a Shanghai-based iron ore analyst commented.
Latest data released by China's central bank also showed that the new yuan-denominated loans totaled Yuan 3.13 trillion ($491.8 billion) in March. This data, higher than the market forecast of Yuan 2.8 trillion, marked an increase of Yuan 395.1 billion over the same period last year, according to a Xinhua News post on Monday.
The analyst also mentioned that with the epidemic spread nationwide being gradually controlled, as well as central government efforts to ensure the smooth operation of public transport networks, steel demand in some areas might pick up and steelmakers might also lift their production further. Views like these also partially boosted market sentiment.
Other optimistic signs are appearing. Though Shanghai, China's most internationalized city and the largest steel-trading hub in East China, is still combating the country's worst COVID-19 outbreak, it saw lockdowns in some areas eased from Monday.
The city of over 26 million is divided into areas according to three categories, as part of targeted efforts to overcome the epidemic resurgence, according to Xinhua's post on Monday. Meanwhile Tangshan, the nation's top steel producing city in North China's Hebei province, has seen the traffic controls gradually ease, as reported.
"In fact, prices of steelmaking raw materials might be firmer than steel prices for the time being, as most steelmakers are likely to continue lifting their production in the near future," he added.
Source:Mysteel Global
