Mon Aug 1, 2011
* U.S. congressional leaders agree to raise debt limit
* China social housing boom also buoying rebar prices
* Indian court bans mining in Karnataka's Bellary (Updates rebar futures, adds comment)
By Manolo Serapio Jr|Reuters
SINGAPORE, Aug 1 (Reuters) - Shanghai rebar futures rose to three-month highs on Monday, joining a relief rally in other commodities as the United States reached a deal to end an impasse over raising its debt ceiling to avoid a disastrous default.
Republican and Democratic lawmakers were expected to vote later in the day on a White House-backed deal which raises the United States' $14.3-trillion borrowing ceiling and cuts about $2.4 trillion from the deficit over the next decade.
The most-active January rebar contract on the Shanghai Futures Exchange rose as high as 4,968 yuan per tonne, a level not seen since May 4. It closed up 0.6 percent at 4,950 yuan.
"The U.S. debt breakthrough was a relief for investors, that's why we're seeing higher prices for most commodities and stocks," said a Singapore-based trader.
Also supporting gains in rebar prices is the construction boom in China where a drive to build 10 million cheaper houses this year is boosting demand for steel.
Construction of the remaining 50-60 percent of the 10 million units is expected to start before November "so there is a rush right now", said a trader in China's eastern Shandong province.
"Rebar prices in the physical market continue to increase and today prices in Beijing rose 20-50 yuan to around 5,050 yuan per tonne," he said.
Increased demand and prices were behind the record pace in China's steel production this year, with daily output averaging more than 1.9 million tonnes versus 1.7 million tonnes in 2010.
Daily steel output in China hit a record 1.998 million tonnes in June, and analysts expect the brisk clip to continue for the second half of 2011 as the low-cost housing boom buoys construction demand.
INDIA SUPPLY WORRIES
Higher steel output should encourage Chinese mills to restock on key raw material iron ore from later this week, traders said, keeping prices elevated.
Iron ore with 62-percent iron content rose 24 cents to $175.69 a tonne on Friday, the highest since May 19, based on the Metal Bulletin's index .IO62-CNO=MB.
The other two global indexes rose modestly, with The Steel index .IO62-CNI=SI at $175.50 and Platts IODBZ00-PLT at $177.25, hovering near two-month peaks touched last week.
Tight supply from India, the world's No. 3 iron ore supplier, is also expected to support prices, with shipments disrupted by monsoon rains and a political crisis in key Karnataka state seen further delaying resumption of exports.
The chief minister in Karnataka resigned on Sunday after an independent probe implicated the politician and several others in a $3.6 billion illegal iron ore mining scandal.
Karnataka banned iron ore shipments in July last year to curb illegal mining and has yet to issue export permits despite an order from India's Supreme Court to lift the ban in April.
Adding to supply worries, India's top court imposed an interim ban on mining in Bellary, where more than 80 percent of Karnataka's annual iron ore output comes from.
"Further disruptions to India's iron ore exports will tighten a seaborne spot market already under pressure from monsoon-affected Indian supplies, and struggling supply elsewhere," Commonwealth Bank of Australia said in a note.
"We continue to see iron ore prices supported above $150/tonne for the next 3-4 years, thanks to tight supply and strong demand."
* U.S. congressional leaders agree to raise debt limit
* China social housing boom also buoying rebar prices
* Indian court bans mining in Karnataka's Bellary (Updates rebar futures, adds comment)
By Manolo Serapio Jr|Reuters
SINGAPORE, Aug 1 (Reuters) - Shanghai rebar futures rose to three-month highs on Monday, joining a relief rally in other commodities as the United States reached a deal to end an impasse over raising its debt ceiling to avoid a disastrous default.
Republican and Democratic lawmakers were expected to vote later in the day on a White House-backed deal which raises the United States' $14.3-trillion borrowing ceiling and cuts about $2.4 trillion from the deficit over the next decade.
The most-active January rebar contract on the Shanghai Futures Exchange rose as high as 4,968 yuan per tonne, a level not seen since May 4. It closed up 0.6 percent at 4,950 yuan.
"The U.S. debt breakthrough was a relief for investors, that's why we're seeing higher prices for most commodities and stocks," said a Singapore-based trader.
Also supporting gains in rebar prices is the construction boom in China where a drive to build 10 million cheaper houses this year is boosting demand for steel.
Construction of the remaining 50-60 percent of the 10 million units is expected to start before November "so there is a rush right now", said a trader in China's eastern Shandong province.
"Rebar prices in the physical market continue to increase and today prices in Beijing rose 20-50 yuan to around 5,050 yuan per tonne," he said.
Increased demand and prices were behind the record pace in China's steel production this year, with daily output averaging more than 1.9 million tonnes versus 1.7 million tonnes in 2010.
Daily steel output in China hit a record 1.998 million tonnes in June, and analysts expect the brisk clip to continue for the second half of 2011 as the low-cost housing boom buoys construction demand.
INDIA SUPPLY WORRIES
Higher steel output should encourage Chinese mills to restock on key raw material iron ore from later this week, traders said, keeping prices elevated.
Iron ore with 62-percent iron content rose 24 cents to $175.69 a tonne on Friday, the highest since May 19, based on the Metal Bulletin's index .IO62-CNO=MB.
The other two global indexes rose modestly, with The Steel index .IO62-CNI=SI at $175.50 and Platts IODBZ00-PLT at $177.25, hovering near two-month peaks touched last week.
Tight supply from India, the world's No. 3 iron ore supplier, is also expected to support prices, with shipments disrupted by monsoon rains and a political crisis in key Karnataka state seen further delaying resumption of exports.
The chief minister in Karnataka resigned on Sunday after an independent probe implicated the politician and several others in a $3.6 billion illegal iron ore mining scandal.
Karnataka banned iron ore shipments in July last year to curb illegal mining and has yet to issue export permits despite an order from India's Supreme Court to lift the ban in April.
Adding to supply worries, India's top court imposed an interim ban on mining in Bellary, where more than 80 percent of Karnataka's annual iron ore output comes from.
"Further disruptions to India's iron ore exports will tighten a seaborne spot market already under pressure from monsoon-affected Indian supplies, and struggling supply elsewhere," Commonwealth Bank of Australia said in a note.
"We continue to see iron ore prices supported above $150/tonne for the next 3-4 years, thanks to tight supply and strong demand."
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