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UPDATE 1-China steel resumes rally, hovers near 4-1/2-year top on output curbs

Published 09/08/2017, 05:46 pm
Updated 09/08/2017, 05:50 pm
© Reuters.  UPDATE 1-China steel resumes rally, hovers near 4-1/2-year top on output curbs

* China's Hebei vows to shut polluting steelmakers from Sept. 1

* Shanghai rebar jumps more than 2 pct, Dalian iron ore up 1 pct (Updates prices)

By Manolo Serapio Jr

MANILA, Aug 9 (Reuters) - Shanghai rebar steel futures jumped over 2 percent on Wednesday to hover near their highest in four-and-a-half years hit earlier this week, resuming a rally spurred by investors anticipating steep production cuts during winter.

China in February ordered steel and aluminium producers in 28 cities to slash output in winter as it fights smog. Last week, the key steel-producing area of Tangshan and other parts of Hebei province said they would implement the order, cutting production by up to 50 percent. in Hebei must comply with state- and province-level emission restrictions by Sept. 1 or they will be shut down, the Hebei Province Environmental Protection Bureau said late on Tuesday. most-active rebar on the Shanghai Futures Exchange SRBcv1 closed up 2.3 percent at 4,006 yuan ($600) a tonne, just off the session's high of 4,008 yuan. The construction steel product touched 4,013 yuan on Monday, its strongest since March 2013, before retreating on Tuesday.

Unless rebar drops to Monday's intraday low of 3,755 yuan, it could rise further on the prospect of the production cuts, said Ric Spooner, chief market analyst at CMC Markets.

"We've seen a (price) adjustment from expectations that there will be ample reductions in China. The question is have we run far enough," said Spooner.

In its February order, China called on steel producers to halve output in four northern provinces - Hebei, Shanxi, Shandong, Henan - as well as Beijing and Tianjin, during the peak winter heating months from November through late February.

China has summoned regulators, officials from the Shanghai Futures Exchange and steel company executives to a meeting to discuss steel prices, people familiar with the matter said, as a surge in prices draws scrutiny from authorities. ore on the Dalian Commodity Exchange DCIOcv1 tracked gains in steel prices, shedding early losses to end 1 percent higher at 566.50 yuan per tonne.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slipped 0.9 percent to $75.46 a tonne on Tuesday, according to Metal Bulletin. The spot benchmark touched $76.17 on Monday, the highest since April 6.

Spooner said iron ore "probably will struggle to get above $80" amid a well-supplied market in the medium term.

Stockpiles of imported iron ore at China's ports stood at 139.15 million tonnes on Friday, according to data tracked by SteelHome. SH-TOT-IRONINV

That was not far below the record 141.45 million tonnes reached in June.

($1 = 6.6817 Chinese yuan)

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