Posted on 01 Oct 2024
Chinese rebar and hot rolled coil futures and the whole commodity market were in a frenzy on Monday, soaring wildly and hitting limit up for multiple products. Both of them touched two-month highs, Kallanish notes.
On the Shanghai Futures Exchange, the most-traded January 2025 rebar contract closed at CNY 3,551/tonne ($506/t) on Monday, up CNY 210/t from the prior trading day. The same contract for HRC gained CNY 213/t to CNY 3,643/t.
The series of stimulus measures announced last week continue to show their impact. Huge funds are frantically buying in major Chinese stock and derivative markets, causing macro and commodity market sentiment to heat up. The growth of steel futures prices has accelerated further and hit the daily limit.
The further relaxation of property purchase restrictions in first-tier cities has also boosted steel futures trading. Among the four first-tier cities, Guangzhou has completely lifted the purchase restrictions. Shanghai and Shenzhen have significantly reduced the number of years that buyers have to pay local taxes before they can obtain home purchase qualifications to just one year.
The down-payment ratio for home purchases has also been reduced by 5 percentage points in the two cities. The down-payment ratio requirement for second-home buyers in these cities is still higher than the 15% required by the central bank. However, the market has welcomed the relaxation measure.
China's financial markets will enter a week-long holiday from Tuesday 1 October. The madness of the last day before the holiday has significantly reduced concerns about an imminent correction. However, since it will take some time for steel demand, as well as overall consumption and the economy to recover, most market participants do not think that they should relax their vigilance, and a downward correction may come a little later.
Source:Kallanish
