China steel clings near 11-week high, eyes best week since Aug
1 December 2017
Shanghai steel futures traded near their strongest level since mid-September on Friday and were on track for their biggest weekly gain in four months, supported by tighter supply in the world’s top producer.
Steel mills across northern China were ordered to slash sintering output by up to half from this month through March as part of Beijing’s battle against smog. Sintering, where iron ore is processed ahead of steelmaking, causes heavy pollution.
Some steel producers are cutting sintering output by less than expected to chase strong prices, said a Beijing-based trader.
“It’s driven by the profit so steel mills don’t want to cut down so much,” she said.
The most-active rebar on the Shanghai Futures Exchange was off 0.3 percent at 3,984 yuan ($603) a tonne by 0231 GMT. The construction steel product earlier peaked at 4,018 yuan, not far below Thursday’s intraday high of 4,043 yuan, which was its highest since Sept. 13.
Rebar has risen about 5 percent so far this week, the most since early August.
Rebar producers had been earning more than 1,000 yuan per tonne in margins this year amid China’s infrastructure push and tighter supply.
Stockpiles of rebar at Chinese traders dropped to 3.35 million tonnes last week, the smallest since at least 2011, according to SteelHome consultancy.
Stronger steel prices had helped lift raw materials iron ore and coking coal, with both looking at weekly gains.
The May iron ore contract on the Dalian Commodity Exchange was last up 1.7 percent at 524.50 yuan a tonne, near Thursday’s 10-week top of 526.50 yuan.
Spot prices have similarly jumped, with iron ore for delivery to China’s Qingdao port climbing 0.3 percent to $68.13 per tonne on Thursday, its highest since Sept. 20, according to Metal Bulletin.
Also on Friday, Dalian coking coal futures rose 1.9 percent to 1,396 yuan a tonne and coke gained 1.8 percent to 2,166 yuan.