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Reuters

China iron ore, rebar hit multi-week highs on policy hopes
Mon Feb 16, 2015 8:25am IST

* Spot iron ore at near 3-week top ahead of China holiday
* Beijing seen to ensure economy grows around 7 pct this
year

By Manolo Serapio Jr
SINGAPORE, Feb 16 (Reuters) - Shanghai rebar steel futures
rose to a one-month peak on Monday and iron ore in Dalian hit
its highest in more than three weeks, spurred by hopes that
China would take measures to stimulate a slowing economy.
Chinese authorities will cut interest rates, increase
liquidity and tolerate some currency weakness to ensure the
economy grows around 7 percent this year, policy insiders say.
China's parliament will unveil the official 2015 growth
target when it meets next month and 7 percent is seen as the
minimum needed to stop unemployment from rising.
The most-traded rebar for May delivery on the Shanghai
Futures Exchange hit a session high of 2,549 yuan
($408) a tonne, its loftiest since Jan. 12. It was up 1.5
percent at 2,543 yuan by 0232 GMT.
On the Dalian Commodity Exchange, the May iron ore contract
was up 2.3 percent at 497 yuan a tonne, after touching
499 yuan earlier, its highest since Jan. 21.
"The markets are thinking there would be more policy support
for the economy after the Chinese New Year," said an iron ore
trader in China's eastern Shandong province.
Chinese markets will be shut for a week from Wednesday for
the Lunar New Year break.
There was limited physical trading ahead of the holiday,
with most Chinese mills and traders having replenished stocks in
recent weeks, hoping steel demand would perk up next month,
traders said.
Iron ore for immediate delivery to China's Tianjin port
.IO62-CNI=SI rose 0.8 percent to $63.30 a tonne on Friday, a
level last seen on Jan. 26, according to data compiled by the
Steel Index. It gained 2.4 percent last week, but is down 11
percent this year amid a glut that nearly halved prices in 2014.
Despite a sustained drop in iron ore stocks at China's
ports, the consumption ratio has "shifted lower in recent
months, falling below the long-term average of four weeks",
Commonwealth Bank of Australia analyst Vivek Dhar said in a
note.
Stockpiles of imported iron ore at major Chinese ports stood
at 96.05 million tonnes as of Feb. 13, the lowest since January
2014, according to consultancy SteelHome which tracks the data.
"We expect China's consumption ratio may continue to fall,
offsetting the upward price implication of falling iron ore port
stocks," Dhar said, citing slower Chinese steel output amid a
weaker property sector.
Rebar and iron ore prices at 0232 GMT

Contract Last Change Pct Change
SHFE REBAR MAY5 2543 +37.00 +1.48
DALIAN IRON ORE DCE DCIO MAY5 497 +11.00 +2.26
SGX IRON ORE FUTURES MAR 64.35 +0.16 +0.25
THE STEEL INDEX 62 PCT INDEX 63.3 +0.50 +0.80
METAL BULLETIN INDEX 63.19 +0.92 +1.48

Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2433 Chinese yuan)

(Editing by Himani Sarkar)