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Steel futures in China, the world's largest producer of manufacturing and construction materials, surged to a more than two-week high on Wednesday on hopes that the Russian-Ukrainian conflict will boost overseas demand for Chinese steel, Reuters reports.
Faced with an unprecedented wave of economic sanctions from Western allies, Russia accounts for roughly 10% of global steel trade, while Ukraine accounts for 4%, according to analysts at Huatai Futures.
The interruption in supply will force some large buyers to seek alternative sources, and "at present, only China can fill this huge market vacancy," the note said.
The most active May contract for hot-rolled coil - a steel used in car bodies and household appliances - on the Shanghai Futures Exchange rose 2.5% to 5,158 yuan ($817.08) a tonne, rising for the third consecutive day to the highest level since February. eleven.
Shanghai construction steel rebar also rose 2.5% to 4,893 yuan per tonne, the highest since Feb. 14.
The outlook for stronger domestic demand for steel has also supported prices, analysts said, as China's parliament begins its annual meeting on Saturday and is likely to introduce more stimulus to cushion the slowdown.
Higher steel prices boosted interest in steel raw materials, with Chinese iron ore and coking coal futures up more than 5% in morning trading.
The most active May iron ore contract on the Dalian Commodity Exchange rose 5.9% to 764 yuan per tonne, the highest since Feb. 15.
On the Singapore Exchange, the April contract for the supply of iron ore jumped 1.9% to $150.90 per ton.
Disruptions in iron ore exports from Russia and Ukraine are also reported to have prompted some European buyers to look for shipments from other countries, which could lead to global supply constraints.
Dalian Coking Coal rose 5.7% to its highest level since October 22. Cox rose 4.9% to its highest level since Oct. 27.
