💥 Fed cuts sparks mid cap boom! ProPicks AI scores with 4 stocks +23% each. Get October’s update first.Pick Stocks with AI

China steel hits nine-week peak amid crackdown, lifts iron ore

Published 22/05/2017, 12:36 pm
© Reuters.  China steel hits nine-week peak amid crackdown, lifts iron ore

* Shanghai rebar, Dalian iron ore climb as much as 5.7 pct

* Crackdown in Tangshan to last through end-May

By Manolo Serapio Jr

MANILA, May 22 (Reuters) - Chinese steel futures jumped nearly 6 percent on Monday to their highest since March, stretching last week's gains on concerns over limited supply as Beijing keeps up a campaign to clamp down on polluting producers.

Tangshan city in Hebei province, China's biggest steelmaking region, earlier this month kicked off efforts to suspend and fine mills that fail to meet emission standards. campaign began on May 9 and will run through the end of the month.

Prices of billet, a semi-finished steel product, picked up steam last week as independent rolling mills who make these into finished products such as rebar, snapped up billet and the price increase spread to other steel products.

"I think some of the rolling mills have brought forward their purchases thinking supply may be at risk," said Richard Lu, analyst at CRU consultancy in Beijing.

The most-active rebar on the Shanghai Futures Exchange SRBcv1 climbed as much as 5.7 percent to 3,366 yuan ($489) per tonne, the highest since March 20. The construction steel product was up 5.3 percent at 3,355 yuan by 0228 GMT.

But Lu said he was sceptical that price gains would be sustained unless demand strengthens.

"We don't think these environmental inspections will have significant impact unless the government can give a very clear order on production cuts and not just controlling emission levels."

"I believe a lot of these plants have already installed the necessary facilities to limit pollution," said Lu.

As steel prices picked up pace, so did raw material iron ore.

The most-traded iron ore on the Dalian Commodity Exchange DCIOcv1 rose as far as 501 yuan a tonne, its highest since May 4, and was last up 4.4 percent at 495 yuan.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB rose 1.8 percent to $62.69 a tonne on Friday, its strongest level since May 4, according to Metal Bulletin.

The spot benchmark climbed 2.1 percent last week, its second such increase in nine weeks.

($1 = 6.8906 Chinese yuan)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.