Shanghai rebar steel futures extended gains into a third session on Tuesday, buoyed by persistent worries about possible tight supply amid market talk of strengthened production restrictions across the country.
The most-active construction steel rebar futures rose 0.9 percent to 4,382 yuan ($637.47) a tonne as of GMT 0149. It hit a 7-year-peak of 4,413 yuan a tonne in the previous session.
Since Friday, market talk about stepped-up environmental measures in the top steelmaking city of Tangshan in Hebei province and in the No.2 steelmaking province of Jiangsu have driven up rebar prices by nearly 5 percent.
However, steel mills and industrial associations in the regions told Reuters they have not received any further notices on production curbs from the government.
“Constant market news on production curbs and expectations of reviving demand in the autumn season have led to madness in the steel market,” analysts from Orient Futures said in a note.
“Many regions have already enforced output restriction requirements and further policies may not have more impact on the market, but in the short-term investors could go even crazier,” they said, adding that further moves would be unsustainable.
Hot-rolled coil futures on the Shanghai Futures Exchange hit a record 4,369 yuan a tonne during early trade on Tuesday.
Average daily crude steel output at major steel companies over Aug. 1-10 rose 1.6 percent to 1.94 million tonnes compared with Jul. 21-31, according to China’s Iron & Steel Association (CISA), fuelled by near-record high profit margins at steel mills across the country.
Steel inventory at mills also increased over the same period, up 4.4 percent to 11.94 million tonnes, CISA data showed.
Steelmaking raw materials dipped after two days of increases, curbed by expectations of falling demand due to stringent production curbs at steel mills.
The most-traded iron ore contract for January delivery on the Dalian Commodity Exchange fell 1.5 percent to 497 yuan a tonne.
Dalian coke futures fell as much as 3 percent to 2,585 yuan a tonne, although spot prices rose by 100 yuan a tonne due to environmental inspections in the major coke producing hub of Shanxi province.
Coking coal prices also dipped on Tuesday, easing 0.3 percent to 1,307.5 yuan a tonne.
Yaang Pipe Industry Co., Limited (www.yaang.com)