Reuters logo
China's steelmaking raw materials rise as capacity curbs may fall short
November 2, 2017 / 3:54 AM / 20 days ago

China's steelmaking raw materials rise as capacity curbs may fall short

* Coking coal, coke, iron ore futures all higher

* Steel output curbs may be less than expected

* Steel rebar futures hold steady

SHANGHAI, Nov 2 (Reuters) - Chinese coking coal and iron ore futures rose on Thursday as capacity curbs in top steelmaking city Tangshan may fall short of expectations, rebounding as prices of the two raw materials have nearly touched their import and production costs.

Tangshan, in northern Hebei province, will temporarily ban the use of total 18.21 million tonnes of its ironmaking capacity from mid-November until mid-March. Ironmaking by blast furnaces is a key procedure for making steel.

The most traded coking coal futures on the Dalian Commodity Exchange rose to a session peak of 1,135 yuan ($172.27) a tonne, its highest since Oct. 23.

By 0221 GMT, coking coal had dropped back to 1,114 yuan a tonne, still up 3.3 percent from the previous session and on track to post the biggest daily gain in about three weeks.

China has planned to curb industrial production in 28 cities during the upcoming winter to tackle hazardous smog.

Tangshan has ordered steel mills to ban use of capacities at different levels in terms of a range of standards, instead of “one-size-for-all” cut, raising expectation that steel production might not fall as much as expected.

“The temporary (ironmaking) capacity cut is lower than the previous market expectation, and mills may not cut production as much as we expected, but the details haven’t been announced yet, so the outlook is uncertain,” said Bai Jing, an analyst with Galaxy Futures in Beijing.

“Meanwhile, iron ore and coke have already fallen to their cost levels, which has lent support to prices,” Bai said.

On the Dalian exchange, iron ore on climbed 1.2 percent to 437.5 yuan a tonne, while coke futures jumped 1.7 percent to 1,725 yuan a tonne.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB rose 1.4 percent to $59.35 a tonne on Wednesday, according to Metal Bulletin.

On the steel side, the most active rebar contract on the Shanghai Futures Exchange edged up 0.3 percent to 3,625 yuan a tonne.

$1 = 6.5885 Chinese yuan Reporting by Ruby Lian and Josephine Mason; Editing by Tom Hogue

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below