* Shanghai rebar up slightly for the week
* Chinese banks told to strictly control credit to steel
By Manolo Serapio Jr
MANILA, Dec 16 Shanghai steel futures steadied
on Friday after another volatile trading week, supported by
China's campaign to slim down its bloated sector.
China's banking regulator said banks must strictly control
credit to coal and steel firms that are violating capacity cuts,
the latest in a series of regulations aimed at reducing loans to
industries struggling with overcapacity.
The world's top steel producer has cut 88 million tonnes of
steel capacity this year, nearly double the target of 45 million
tonnes and helping fuel an 88 percent rally in steel futures.
The most-active rebar on the Shanghai Futures Exchange
was up 0.2 percent at 3,374 yuan ($486) a tonne by
midday. The construction steel product has gained marginally
this week, having retreated after touching a 32-month peak on
Since November, China's crackdown has focused on producers
of low-quality steel that use induction furnaces which consume
steel scrap as raw material.
"The total supply loss from induction furnaces may account
for 5-6 percent of Chinese crude steel production, and this
could create potential upside to steel prices into 2017 if
implementation is comprehensive and sustained," Goldman Sachs
analysts said in a report.
Iron ore on the Dalian Commodity Exchange was
almost flat at 606.50 yuan a tonne. The contract hit a nearly
three-year high of 657 yuan on Monday, backed by the strength in
Both iron ore and steel prices "will remain resilient over
2017, following strong gains in 2016, as additional Chinese
infrastructure spending will tighten the market," according to
BMI Research, a unit of Fitch Ratings.
That should support iron ore prices over the next six to
nine months although BMI said it sees a "relapse later in
2017-2018 stemming from a slowdown of the country's construction
activity and the oversupplied seaborne iron ore market."
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
rose 2.9 percent to $81.50 a tonne on Thursday, according to
Metal Bulletin. The spot benchmark was nearly flat so far this
week after gaining 5 percent last week.
($1 = 6.9459 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)