Just when you thought old Chinese industries had been killed off ... the stuff fights back. Volume and open interest in Shanghai steel rebar and Dalian iron ore futures has risen steadily since December to match some of the highest levels of the past three years. The front-month rebar contract’s price soared to match our target of 4,000 yuan (US$578.50) per tonne. We continue to believe some consolidation is needed around this area, partly because it is overbought and bullish momentum has eased since February, and also because the rally has pulled away from moving averages. Dips to the 3,500-yuan area are seen as buying opportunities for a rally to 4,500 yuan later this year.
