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China's steel futures rose on March 8 as improved margins for the world's largest industrial and building materials producer bolstered sentiment, which also helped lift the price of iron ore, a key ingredient.
The value of steel rebar on the Shanghai Futures Exchange in May rose 1.6% to 4,793 yuan ($ 736.82) per tonne by 03:30 GMT.
The May contract for hot-rolled coil used in home appliances and car bodies rose 2.3% to 4,995 yuan a tonne after rising to 5,038 yuan, close to a record peak of 5,088 yuan reached on March 3.
“High prices for finished goods have led to a recovery in the profitability of steel mills,” analysts at Sinosteel Futures said.
The recent decline in crude steel production and the expected rise in demand in China this month after the lunar New Year holidays in February have driven prices up, they said.
"Last Friday's data showed that the profitability of 247 steel mills nationwide was 90.04%, up 4.33% over the previous week and 3.46% up over the same period last year," - said analysts of Sinosteel.
Iron ore futures were up 0.9% on the Dalian Mercantile Exchange and 0.8% on the Singapore Exchange.
“The positive profitability of steel mills and stronger export demand should support the growth of import demand for iron ore in China,” raw material strategists ANZ said in a note.
Shanghai stainless steel rose 1.3%, recovering from the market turmoil last week when nickel prices plunged. Dalian coking coal jumped 2.7% and coke fell 2.2%.
