China’s construction steel rebar jumped more than 4 percent on Wednesday, after hitting a seven-and-a-half-month low in the previous session, buoyed by expectations of tighter restrictions on production.
Top steelmaking city Tangshan in northern China held a meeting with representatives from industrial plants in the region on improving general environmental situation in companies, sources told Reuters.
Meanwhile, industrial websites reported Tangshan may summon companies for another closed-door meeting on Wednesday and discuss steps to reduce toxic emissions.
Reuters was unable to verify the authenticity of the report.
“It is still unclear what Tangshan will do in the next move, but the meetings sent signals that the city may tighten production restrictions, which buoyed market sentiment on steel prices,” said analysts from CITIC Futures in a note.
Utilisation rates at steel mills in Tangshan were at 54.88 percent last week, as of Nov. 30, down 1.83 percentage points from the previous week due to temporary production cuts under smog alerts, data compiled by Mysteel consultancy showed.
However, it is still much higher compared with 43.29 percent in the same period last year.
Benchmark Shanghai rebar prices closed 4.1 percent higher at 3,463 yuan ($504.35), bouncing from a multi-month low seen on Tuesday.
Prices of steel billet in Tangshan, a benchmark for spot steel prices, also rose on Wednesday, up 60 yuan a tonne to 3,420 yuan, according to Mysteel data.
Meanwhile, optimistic outlook brought by the trade truce between the United States and China have not completely faded, which helped to support prices of steelmaking raw materials.
The most-active iron ore futures on the Dalian Commodity Exchange gained 2.5 percent to 477.5 yuan a tonne, while coking coal rose 2 percent to 1,412 yuan.
Coke contract for January delivery remained on the upward trend after surging up to 5.5 percent on Tuesday. The contract closed 3.5 percent higher at 2,337 yuan a tonne.
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