China steel heads for second weekly fall amid ample supply
China’s steel futures edged higher on Friday, but were on course for their second weekly drop amid signs that steel output in the world’s top producer will remain high.
Prices of steelmaking raw materials rose, with iron ore hitting a one-week peak and coking coal and coke also gaining.
The most actively traded rebar on the Shanghai Futures Exchange was up 0.9 percent at 3,975 yuan ($572) a ton, as of 0239 GMT, having touched a 3-1/2-month low of 3,878 yuan on Thursday.
However, the construction steel product has fallen nearly 2 percent for the week so far.
“China’s steel production may not show any signs of weakening when the winter season starts from mid-November as China’s government will exercise flexibility in reining in production … as the pollution control (efforts have) made some progress,” Argonaut Securities analyst Helen Lau said in a note.
Ditching blanket production curbs imposed last winter, China has given cities and provinces the flexibility to set their own restrictions based on their emission levels.
Data from the China Iron and Steel Association showed that average daily crude steel production at its member mills stood at 1.97 million tons over Oct. 1-20, nearly matching September’s 1.98 million tonnes.
However, the absence of across-the-board limits will make it difficult to determine the actual impact on production this winter, ANZ analysts said.
Iron ore on the Dalian Commodity Exchange hit a one-week high of 525.50 yuan per ton and was last up 1.6 percent at 523 yuan.
China’s iron ore imports rose 11.2 percent from a year ago to 88.4 million tons in October, government data showed on Thursday.
Coking coal increased 0.7 percent to 1,356.50 yuan a ton and coke gained 0.9 percent to 2,379 yuan.
Source: Reuters (Reporting by Manolo Serapio Jr., Editing by Sherry Jacob-Phillips)