Shares rebound amid surging commodity prices

Shanghai stocks rebounded today as investors pursued coal mining and nonferrous metal firms amid surging commodity prices.

The Shanghai Composite Index surged 0.68 percent to close at 3,268.43 points.

Shanxi Coking Co jumped 7.47 percent to end at 9.06 yuan, while Tibet Summit Resources Co gained 7.84 percent to finish at 48.43 yuan.

The key index rose after the most traded coking coal contract for January, 2018 delivery jumped by the daily limit of 8 percent to 1,456 yuan (US$218) per ton, while iron ore futures soared 5.71 percent to 555 yuan per ton and prices for aluminum and copper futures both climbed over 2 percent.

Analysts explained that the steel and commodity price surges were based on cut in supply, and investors became optimistic about further price gains in these sectors, contradicting the view of China Iron and Steel Industry Association that speculators were behind the jump in steel prices.

“Prices of iron ore, rebar and coal have started to soar since December 2015 when the government began cutting overcapacity,” said Kang Shuiyue, chief investment officer at Danyang Investment Group.

“No speculation could last this long,” Kang said, adding that the coal and steel sectors are on a bull run ahead of other industries where supply cuts are also being implemented.

UBS also predicted aluminum prices would rebound in the near future as “China has cut capacity at a pace faster than expected.”