China’s steel futures climbed to their strongest level in more than three weeks on Tuesday amid concerns over tighter supplies following an unverified report of more production curbs in the country’s biggest steelmaking city.
Tangshan in Hebei province plans to impose a new round of production curbs from Tuesday until the end of this month in order to improve its air quality, information provider Shanghai Metals Market said on its website.
All sintering machines and shaft furnaces at mills in Tangshan will be ordered to cut production by half, according to the report. Steel mills near the city centre will have to halve their blast furnace capacity, while other mills will have to reduce capacity by 30 percent, the report said.
Local authorities in Tangshan declined to comment on the report. Two traders based in Tangshan said they had seen no sign of mills closing, but said the report had driven up spot prices for steel billets.
The price of the most-active October rebar on the Shanghai Futures Exchange jumped as much as 2.4 percent to 3,881 yuan ($586) a tonne, the highest since June 15. The construction steel product closed up 1.9 percent at 3,862 yuan.
On Monday, China’s parliament asked all of China’s major polluters to install real-time emissions monitoring systems before the end of this year in order to improve surveillance in the country and bring lawbreaking firms into line.
“New environmental measures lifted market sentiment, while spot trade is also active at this moment, which helps to push futures prices up,” analysts at CITIC Futures said in a note.
On Tuesday, the Tangshan government ordered steel mills to meet the capacity reduction target of 7.81 million tonnes by the end of November, state-owned Xinhua News reported citing local authorities.
Prices of steelmaking ingredients mostly rose on expectations steel mills that have closed for environmental checks will reopen and replenish their stocks.
At least two steel mills in Xuzhou city in China’s second biggest steelmaking province are preparing to resume production after shutting for 2-1/2 months for an environmental upgrade.
Iron ore for September delivery on the Dalian Commodity Exchange gained 0.4 percent to 459 yuan a tonne.
Coking coal futures pared early gains and slipped 0.8 percent to 1,142.5 yuan a tonne, while coke rose 0.7 percent to 2,026 yuan.
Source: ReutersPrevious Next