China's steel futures climbed on February 20 on expectations that Beijing's measures to prop up its epidemic-hit economy will help revive demand for the manufacturing and construction material.
The latest measure is a cut in the benchmark lending rate on February 20 lower financing costs for businesses hurting from shutdowns and lockdowns intended to contain the coronavirus outbreak.
Such optimism added fuel to the rally in iron ore futures that was initially driven by worries about tightening supplies of the steelmaking raw material from Australia and Brazil.
The Shanghai Futures Exchange's most-traded construction steel rebar contract, with May expiry, rose as much as 1.7% to 3,447 yuan/t, the highest since February 11.
Hot-rolled steel coil, used in cars and home appliances, jumped 1.4% to 3,453 yuan/t, the strongest also since February 11.
"A number of measures have been intensified ... to stabilize the economy," analysts at Sino-Steel Futures Co Ltd in Beijing said in a note, citing moves by the State Council to reduce social insurance premiums and other measures to aid businesses.
Some of China's manufacturing hubs, meanwhile, are starting to loosen curbs on the movement of people and traffic, while local governments prod factories to restart production, following weeks of stoppages due to the outbreak.
A dramatic drop in new cases in China's Hubei province - the epicentre of the epidemic - also buoyed market sentiment.
"Helping sentiment is the track for COVID-19 cases ... with the number of new recoveries now exceeding the number of new cases and suggesting the virus may be close to peaking in China," said Tapas Strickland, director of economics at National Australia Bank in Sydney.
"China is also starting to ease up on containment measures," he wrote in a note.
(Writing by Emma Yang Editing by Jessie Jia)
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