Shanghai rebar dips for third day as summer production curbs end
Construction steel rebar extended losses on Monday after posting its weakest weekly performance since late March, with investors expecting mills in top steelmaking cities to resume operations as summer production curbs expire.
Steel mills in city of Tangshan, the biggest steelmaking hub in the country, were ordered to shut some production capacity over six weeks from mid-July till end-August in order to lower their emissions of PM2.5 small breathable particles.
Tangshan’s city government has not issued official notices to prolong the curbs, although the city remains one of the smoggiest regions in the country.
Weekly utilisation rates of blast furnaces at steel mills across China rose 0.3 percentage points to 66.71 percent as of Friday, with rates in Tangshan climbing 5.5 percentage points to 56.1 percent, data compiled by Mysteel consultancy showed.
The most-active rebar futures contract on the Shanghai Futures Exchange closed 0.2 percent lower to 4,087 yuan ($598.56) a tonne. The contract lost almost 6 percent last week, the weakest level in nearly 4 months.
Prices were also curbed by tepid trading at physical market. Trading volume of spot rebar in Shanghai, a benchmark reflecting physical demand, plunged to 18,944 tonnes last week, the lowest since early March.
“Despite recent market talks about environmental measures across the country, market trading has started to show a waning tendency…which added pressure on steel prices,” Orient Futures analysts said in a note.
Stockpiles of steel products at mills climbed 240,000 tonnes last week from a week ago, reaching 4.36 million tonnes, their highest level since late July, Mysteel data showed.
Steelmaking raw materials also edged down alongside steel prices. The most-traded iron ore futures on the Dalian Commodity Exchange fell 0.6 percent to 484.5 yuan a tonne.
Coking coal for January delivery dipped 2.1 percent to 1,233.5 yuan a tonne, while coke lost 3 percent to 2,363.5 yuan.
Source: Reuters (Reporting by Muyu Xu and Josephine Mason Editing by Eric Meijer)