Steel and iron ore futures in China bounced back on Thursday from losses in the prior session, tracking other commodities in Asia as risk-appetite recovered.

But expectations that steel supply could continue to outpace demand in the world's top consumer and producer suggest the price gains may be difficult to sustain, analysts said.

The most-traded rebar, a construction steel product, on the Shanghai Futures Exchange was up 3.1 percent at 2,445 yuan ($366) a tonne by midday. On the Dalian Commodity Exchange, raw material iron ore rose 1.6 percent to 436 yuan a tonne.

The gains follow those in other risk assets from oil to copper and equities after Wednesday's selloff that was spurred by renewed fears on the global impact of Britain's exit from the European Union.

Richard Lu, analyst at CRU consultancy in Beijing, said firmer steel futures could again lift Chinese physical prices although there have been no significant changes in supply-demand dynamics.

"This is largely sentiment driven," said Lu. "The market will eventually be taken hold of again by fundamentals particularly in the longer term and I expect that there will be a downward correction in the futures market."

China is under pressure from other countries, led by the United States, to cut it excess steel capacity, estimated at around 300 million tonnes or three times Japan's annual output.

Cheap steel shipments from China have forced countries to impose a slew of anti-dumping duties against Beijing.

The recent spikes in Chinese steel prices have encouraged northern Chinese mills to boost output, said Lu, adding to the glut.

While recent severe flooding across central and southern China should curb production among mills located there, Lu said "simultaneously demand from these regions will also be seriously impacted".

Traders say there has been limited activity in the spot iron ore market amid plentiful stocks of the raw material at China's ports.

Iron ore for delivery to China's Tianjin port was nearly flat at $55.80 a tonne on Tuesday, according to The Steel Index. The price assessor did not publish prices on Wednesday due to the Singapore public holiday.

Inventory of imported iron ore at major Chinese ports stood at 102.55 million tonnes on July 1, the most since December 2014, according to data tracked by SteelHome consultancy.

Source: Reuters