Steel rallies

Manila

Chinese rebar steel futures surged nearly 7 percent on Wednesday to their highest since April 2014, spurring a rally in raw materials iron ore and coking coal, amid signs of a strengthening economy and worries over tighter supply.

Iron ore jumped more than 7 percent to its strongest in nearly three years, while coking coal and coke also rose sharply. The advance marked the fifth consecutive day of gains for both steel and iron ore.

Traders are replenishing steel inventories on hopes firm demand will be sustained next year as China´s manufacturing sector recovers and Beijing spends more on infrastructure projects. At the same time, ongoing environmental inspections in China in Beijing´s efforts to tackle pollution have restricted output at steel mills, tightening the market.

"The reason why the steel market remains strong even though seasonally it´s a weak period is mainly due to supply-side tightness," said Helen Lau, analyst at Argonaut Securities.