Dwindling production from China’s top-steelmaking city of Tangshan and a surge in domestic demand resulted in China steel prices vaulting to record highs on Tuesday.
On the Shanghai Futures Exchange, the construction steel rebar surged to the highest since 2011, with the benchmark May contract increasing by 2.4% to 5,200 yuan ($793.42) a tonne. The Shanghai prices of hot-rolled coil also advanced, with benchmark May contract increasing 1.3% to 5,589 yuan a tonne. This is the strongest price since 2014. The Shanghai stainless steel inched up 0.6%.
Production curbs, increased demand
There have been increasing production curbs for the construction and manufacturing material. Sinosteel Futures analysts said in a note that the restrictions imposed in the production in Tangshan city during the peak demand season resulted in the decline in the stocks at commercial warehouses and caused a “bullish atmosphere” for the market.
On April 3, the Tangshan government had urged mills to speed up emission reduction to comply with the planned level of progress required by June 15 and warned of suspension if they fail to meet the required progress. The government also vowed to introduce specific emission requirements for the sector soon.
China’s state planner and industry ministry have also been implementing steel capacity cuts for curbing output further in 2021 to reduce emissions. The ministry has now announced planned inspections to check on the implementation of these curbs.
The increase in domestic demand for steel also contributed to the current surge in steel prices.
Dalian, SGX iron ore benchmarks fall
The benchmark prices for iron ore dipped, with iron ore on the Dalian Commodity Exchange declining by 0.6% to 971 yuan a tonne by 0300 GMT and the Singapore Exchange’s most-active April contract retreated 0.2% to $165.80 a tonne.
As per the latest data available from SteelHome consultancy on Refinitiv Eikon, the spot iron ore from Australia for delivery to China SH-CCN-IRNOR62 traded at $168 a tonne on Friday. The Dalian coking coal moved up 0.1%, while coke dropped 0.1%.