- Chinese rebar and iron ore futures have surged on Wednesday.
- Rebar futures sit at a two-month high with iron ore contracts at a one-week high.
- The sharp rally follows the release of data showing inventory levels in China continued to decline last week.
Chinese steel futures are surging, rising to a two-month high on Wednesday.
And that’s dragging iron ore futures along for the rise.
Here’s the scoreboard with a little over an hour to trade on Wednesday.
SHFE Rebar ¥3,691 , 3.27%
DCE Iron Ore ¥475.00 , 2.48%
Resuming trade after a four-day break, traders wasted little time in hoovering rebar futures in Shanghai, bidding the October 2018 contract up to as high as 3,694 yuan a tonne, a level not seen since March 9.
From March 26, it’s rallied over 16%.
The surge in rebar had helped to lift iron ore futures in Dalian which rose to as high as 476 yuan at one point during the session.
After five consecutive daily declines in a row, it appears unlikely that spot iron ore markets will add to that losing streak when Metal Bulletin releases its Iron Ore Index later in today’s session.
The move in both contracts followed the release of data showing inventories of both rebar and iron ore continued to decline last week, hinting that demand is continuing to improve as the spring construction season ramps up.
According to Thomson Reuters, citing data from Steelhome Consultancy, rebar inventories held by Chinese traders dropped to 7.13 million tonnes last week, leaving the decline from the multi-year high of 9.79 million tonnes struck in mid-March at 27.2%.
Adding to optimism over the demand outlook, separate data revealed iron ore port inventories fell by 500,000 tonnes to 159.28 million tonnes over the same period.
Steel and iron ore prices were hammered over March, undermined by a slower-than-expected draw in inventory levels, creating a concern over the outlook for demand.
Those fears appear to be nothing but a distant memory at present.
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