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Shanghai steel futures climb to 10-month high on supply woes

Shanghai construction steel rebar futures jumped to a 10-month top on Thursday, climbing more than 1 percent as China’s crackdown on pollution raised concerns over supplies.

China’s top steelmaking city Tangshan has extended recent emergency pollution control measures until July 21 because of a possible major smog alert.

The most-active rebar contract on the Shanghai Futures Exchange was up 1.4 percent at 3,993 yuan ($593.37) a tonne, as of 0146 GMT. Earlier in the session, the market hit 4,005 yuan a tonne, the highest since Sept. 4.

“Investors have been buoyed by the efforts by Chinese authorities to continue to close underutilised steel capacity,” ANZ said in a note.

“The subsequent rise in steel prices continues to support iron ore. The host of company reports showing strong growth in production didn’t seem to worry the market.”

Anglo-Australian miner BHP Billiton Ltd said iron ore production in its fiscal fourth quarter rose 3 percent as productivity improved, cementing a record annual output as it set a bigger target for the current year.

Steelmaking raw materials gained on the back of higher rebar prices.

Iron ore on the Dalian Commodity Exchange added 1.3 percent to 472 yuan a tonne after climbing earlier in the session to 473.5 yuan a tonne, the highest since July 2.

Coke rose 0.6 percent to 2,020 yuan a tonne and coking coal gained 0.8 percent to 1,154 yuan a tonne.

Russian steel producers played down the impact of the European Union’s curbs on steel imports on Wednesday, which, according to analysts, may even allow some of them to increase supplies to the bloc compared with a year ago.

On Thursday, the EU will set the quotas for 23 steel product categories at the average of imports over the past three years, with a 25 percent tariff set for volumes exceeding those amounts.
Source: Reuters

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