Shanghai rebar hits one-week high after upbeat China data

Shanghai steel futures rose to a oneweek peak on Monday after data showing strong profits at steel producers helped boost overall earnings growth at China’s industrial firms to the quickest pace in six months.

Profits at Chinese industrial companies rose 22 percent in April from a year ago to 576 billion yuan ($90 billion), government data showed on Sunday, as profits at iron and steel processing firms surged 260 percent.

“The regained profit growth momentum reflects the strength in the economic fundamentals,” Argonaut Securities analyst Helen Lau said.

The most actively traded rebar for October delivery on the Shanghai Futures Exchange was up 0.3 percent at 3,594 yuan a ton after earlier reaching 3,626 yuan.

A sustained drop in steel inventories from March had pointed to firm demand in China.

Stockpiles of construction steel product rebar at Chinese traders fell 38 percent from a five-year high set in mid-March to 6.03 million tons in mid-May.

Firmer steel futures had helped prices of steelmaking raw materials come off the session’s lows, although iron ore remained weak.

The most-traded iron ore on the Dalian Commodity Exchange was down 0.9 percent at 454 yuan a ton, but off a low of 448.50 yuan, its weakest point since April 18.

Iron ore stocks at China’s major ports stood at 160.58 million tons on Friday, up 1.6 million tons from the previous week and not far from the record 161.68 million tons reached in April, SteelHome data showed.

“This did stoke fears that the continued strength in iron ore imports into China would add to this oversupply,” ANZ analysts said in a note.