Shanghai steel prices rose for a second straight day on Thursday, buoyed by expectations that China could launch more infrastructure projects next year which could boost demand in the world’s top steel consumer.

The Chinese government has tweaked its priorities to focus more on infrastructure, exports and fighting water pollution while slowing efforts to reduce capacity in coal and steel industries, state media reported on Wednesday.

In its guidance to local governments and authorities, the State Council, or cabinet, said new infrastructure should focus on construction of roads and waterways.

“There is this expectation of Chinese government stimulating more growth in 2019 just after the Chinese New Year,” said Darren Toh, steel and iron ore data scientist at Tivlon Technologies, a Singapore-based steel and iron ore data analytics company.

The Lunar New Year falls in early February.

The most-active rebar contract on the Shanghai Futures Exchange was up 1.3 percent at 3,393 yuan ($494) a tonne by 0234 GMT. Hot rolled coil rose 1.7 percent to 3,387 yuan.

Slower steel demand as construction projects in China are halted because of the cold weather weighed on steel prices in recent weeks.

The price of construction steel product is still down nearly 16 percent from a seven-year peak reached in late August.

“The market is pricing in a little bit of positivity on demand moving forward,” Toh said. “I think it’s pretty sustainable.”

Steel’s strength also lifted prices of some steelmaking raw materials, with coke on the Dalian Commodity Exchange up 0.8 percent at 1,997 yuan a tonne and coking coal gaining 0.8 percent to 1,214.50 yuan.

The most-traded May iron ore eased 0.3 percent to 475 yuan a tonne.

Spot iron ore for delivery to China SH-CCN-IRNOR62 rose 0.9 percent to $67 a tonne on Wednesday, according to SteelHome consultancy.

 

Source: in.reuters.com

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