MANILA, Sept 16 (Reuters) – Chinese steel futures hit a 1-1/2-month high on Monday on hopes that Beijing will roll out more stimulus measures after latest economic indicators showed deepening slowdown in the world’s second largest economy.
China’s industrial production grew at the weakest pace in 17-1/2 years in August, a sign of increasing weakness in an economy lashed by trade headwinds and soft domestic demand.
Monday’s data followed downbeat remarks by Chinese Premier Li Keqiang, saying it is “very difficult” for the domestic economy to grow at 6% rate or more because of the high base from which it was starting and the complicated international backdrop.
The dismal industrial output figures raised the likelihood of further stimulus from Beijing, which could boost demand for construction and manufacturing materials, said Helen Lau, metals and mining analyst at Argonaut Securities in Hong Kong.
The most-active construction steel rebar contract on the Shanghai Futures Exchange rose as much as 1.9% to 3,570 yuan ($504.78) a tonne, its strongest since Aug. 1.
Hot-rolled coil, the steel used in cars and home appliances, jumped as much as 1.7% to a 1-1/2-month peak of 3,581 yuan a tonne.
Possible tighter steel output restrictions in China ahead of the nation’s National Day holidays next month and during the winter season later this year are also providing further support to prices, Lau said.
Beijing is desperate to minimise pollution across northern parts of the country and keep the Chinese capital safer before celebrations of its 70th anniversary on Oct. 1.
Surging oil prices may put further pressure on China and the global economy. Oil futures hit six-month highs on Monday after weekend attacks on Saudi Arabia’s crude facilities knocked out more than 5% of global oil supply.
Most steelmaking raw materials advanced on Monday, with the most-traded iron ore on the Dalian Commodity Exchange , for delivery in January 2020, up as much as 3.4% to 690 yuan a tonne, its highest since Aug. 7.
Benchmark spot 62% iron ore for delivery to China SH-CCN-IRNOR62 settled at $95.50 a tonne on Sept. 12, before a three-day weekend in China due to Friday’s Mid-Autumn Festival. That level was its highest since Aug. 6, according to data tracked by SteelHome consultancy.
Coke futures advanced as much as 2.2% to 2,025 yuan a tonne on Monday, their firmest since Aug. 14. Coking coal , however, was down 0.3% at 1,350 yuan a tonne, as of 0258 GMT, wiping out early gains.
China produced 87.25 million tonnes of crude steel in August, up 9.3 percent on the year, the statistics bureau said on Monday.