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Shanghai rebar hits 10-1/2 high on supply tightness concerns

China’s construction steel rebar reversed gains after hitting a 10-1/2-month peak on Tuesday, but stayed firm amid continued concerns about tight supplies over more stringent environmental measures.
The most-active rebar futures on the Shanghai Futures Exchange rose as much as 0.9 percent to 4,033 yuan a tonne in early trade, their highest since early September. It closed down 0.4 percent at 3,983 yuan ($583.94) a tonne.
“Recent environmental inspections and new three-year anti-pollution action plan suggest that production curb policies will not loose in the second half of this year,” Haitong Futures analysts said in a note.
The environmental ministry said on Monday it had extended monthly air quality rankings to 169 cities from 74, in order to add pressure on local authorities as it intensifies its campaign against air pollution.
The top steelmaking city of Tangshan was named as the worst place for air quality in the new list of 169 cities in June. Tangshan ordered steel mills to start a six-week production cuts from Friday.
Spot steel prices edged up 0.1 percent to 4,360.57 yuan a tonne on Monday, Mysteel data showed.
“Demand in property and infrastructure sectors is expected to stay firm in H2, although the slowed de-stocking process lately will inhabit steel prices,” Haitong’s note said.
Stockpiles of steel products rose 29,500 tonnes to nearly 10 million tonnes on Friday from prior week, according to Mysteel data, indicating a tepid demand in the summer season.
Steelmaking raw materials went up on Tuesday alongside firm rebar prices.
Iron ore contract for September delivery on the Dalian Commodity Exchange climbed 0.2 percent to 474.5 yuan a tonne.
Coke futures jumped 2.1 percent to 2,119 yuan a tonne, their highest in a month.
Dalian coking coal gained 1.3 percent to 1,178.5 yuan a tonne.
Source: Reuters
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