Reuters reported that China steel futures rose for the first time in five sessions on Friday pulled up by sharp gains in other Shanghai traded commodities as a surprise rate cut from the European Central Bank bolstered investor sentiment.

The most traded May rebar contract on the Shanghai Futures Exchange rose 2.9% to close at CNY 4,121 a tonne. Despite the gain, rebar was down 1.4% for the week after shedding more than 4% in the past four sessions.

Hopes that Greece will abandon plans to hold a referendum on a new bailout plan also helped soothe investors worried about a deteriorating euro zone crisis although traders remained unsure whether steel prices can sustain their strength in the face of limited demand in top consumer and producer China.

Most construction activities in China either slow or stop during winter and this will restrain demand for steel already slowed by tighter credit as Beijing makes fighting inflation its top priority.

A short lived rise in Chinese steel prices could sap the recovery in spot iron ore prices.

(Sourced from Reuters)