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PrintChinese steel futures rebounded on Monday from one-month lows hit in the previous session as
positive inflation and trade data added to optimism that the country's economy is stabilizing, strengthening outlook for steel demand.
China's consumer inflation held steady in August while producer price deflation continued to ease, adding to evidence of stabilisation in the world's second-largest economy after recent improved trade figures and surveys showing a better climate for manufacturers.
"Investors have gained confidence from the improving economic data, especially the decline in producer prices has narrowed, pointing to better prices of industrial products," said Jin Tao, an analyst with Guotao Junan Futures in Shanghai.
The most-traded rebar contract for January settlement on the Shanghai Futures Exchange climbed 1 percent to 3,756 yuan ($610) a tonne by the midday break, snapping four straight days of losses. It fell to one-month low of 3,705 yuan on Friday.
Concerns on a steel glut in the world's largest producer also eased after new output data, helping push up prices.
The average daily crude steel output stood flat at 2.119 million tonnes between Aug.21-31 compared with 2.118 million tonnes between Aug.11-20, industry data showed.
"It looks like the steel output (growth) has been curbed, while inventories have been falling, which is good as this suggested demand is healthy while the supply glut is not worsening," said a Beijing-based trader.
Market players have been concerned that supply growth is rapidly outpacing demand growth in China, which would weigh on prices even as underlying demand remains resilient.
The firmer outlook in steel is expected to give a lift to steelmaking raw material iron ore, with traders expecting the commodity to see upward momentum this week.
The most active iron ore swaps for October settlement cleared by the Singapore Exchange were traded at $131 a tonne on Monday, compared with $128.5 traded on Friday, brokers said.
Iron ore with 62 percent grade .IO62-CNI=SI fell for the third consecutive session on Friday, losing more than 2 percent to $134.1 a tonne, according to the Steel Index. It fell 2.6percent last week.
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