China steel futures extend gains on firm demand, trade optimism

Construction rebar and hot-rolled coil futures in China rose for the seventh straight session on Tuesday, boosted by firm consumption outlook even as data showed that the country reported a sharp drop in factory gate prices last month.

The October contract of rebar on the Shanghai Futures Exchange ended up 0.4% to 3,464 yuan ($488.42) a tonne.

Hot-rolled coil, used in the manufacturing sector, edged up 0.3% to 3,333 yuan per tonne.

The producer price index (PPI) fell 3.1% from a year earlier, China’s National Bureau of Statistics said, compared with a 2.6% fall tipped by a Reuters poll and a 1.5% decline in March. The decline in April’s PPI marks the sharpest drop on an annual basis in four years.

But on a monthly basis, prices of steel and nonferrous products dropped at slower paces, with the fall in ferrous metals smelting and processing prices narrowing by 0.3 percentage points.

Benchmark iron ore futures on the Dalian Commodity Exchange , for September delivery, closed up 1.0% to 638 yuan ($89.96) a tonne.