Steel futures in China rose for a third consecutive session and hit a 1-week high on Wednesday, supported by a pickup in orders by steel mills and the absence of a spike in inventories.
The most active rebar futures for October delivery on the Shanghai Futures Exchange rose 2.8 percent to 2,143 yuan ($325.27) a ton, the highest close since June 14.
"Investors have raised hopes that downside risk for prices is small after a big slump in May while steel mills' orders unexpectedly picked up and market inventories did not pile up," said Zhao Chaoyue, an analyst with Merchant Futures in Shenzhen, South China's Guangdong Province.
Total inventories of five steel products, including hot-rolled coil for machinery use and rebar for construction use, remained unchanged at 8.126 million tons in June versus a month earlier, the China Iron and Steel Association said on Monday.
Typically, steel stocks pile up as construction work slows in China between June and August due to hot weather. But this year steel demand in the top consumer has picked up on a year-on-year basis due to China's stimulus measures, Zhao noted.
"A couple of mills that I've spoken to have seen their orders picking up in early June from the average level in May when sales were hit by a big slump in prices," Zhao said.
Steel futures tumbled 22 percent in May after a 21 percent jump in April. Demand is expected to pick up again in September and October.
