Chinese
steel futures rose on Tuesday, buoyed by government efforts to relieve
financial distress in the country’s troubled property sector, but iron ore
prices fell on persistent concerns over waning demand for the steelmaking
ingredient.
Top steel
producer China’s property sector, which accounts for about a quarter of
domestic steel demand, has been under the spotlight amid a widening
mortgage-payment boycott on unfinished real estate projects.
Chinese
regulators have stepped up efforts to encourage lenders to extend loans to
qualified projects, moving to ease a turmoil that could add strain to an
economy already hit hard by COVID-19 lockdowns.
Construction
steel rebar on the Shanghai Futures Exchange SRBcv1 ended daytime trade 1.7%
higher at 3,774 yuan ($559.37) a tonne, well off session-high 3,872 yuan but
extending a rebound from a 19-month low on Friday.
Hot-rolled
coil, which is steel used in car bodies and home appliances, climbed 1.4% to
3,755 yuan a tonne, bouncing off a 20-month low.
Stainless
steel SHSScv1 edged up 0.1%.
“We’re
quietly confident Chinese authorities won’t allow property developers who are
‘too big to fail’ to go bankrupt, avoiding any prospective risks of contagion
to the country’s banking sector,” said Atilla Widnell, managing director at
Navigate Commodities in Singapore.
But futures
prices of steelmaking raw materials fell as the overall outlook for China’s
steel demand remains clouded by COVID-19 risks and bad weather.
Coking coal
dropped 2.6% on China’s Dalian Commodity Exchange, while coke shed 1.1%,
reversing early gains.
Iron ore’s
front-month August contract on the Singapore Exchange slumped 2.5% to $98.20 a
tonne, as of 0724 GMT, while Dalian iron ore’s most-traded September contract
dropped 1% to 656.50 yuan a tonne.
China’s plan
to form a new enterprise to centralise iron ore importation and invest in
developing mines, which could boost the country’s pricing power, has meanwhile
gained momentum.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; editing by
Uttaresh.V)