BEIJING, Sept 4 (Reuters) - Prices for Chinese Shanghai rebar steel edged up on Tuesday amid concerns further potential output cuts in the country’s top steelmaking city would hit supply.
The most-active construction steel futures had risen 0.6 percent to 4,111 yuan ($603.22) a tonne by 0214 GMT.
Prices have been buoyed by market expectations that the city of Tangshan, China’s No.1 steelmaking hub, could introduce new output cuts in September to curb harmful emissions from heavy industry.
However, no official notice has been delivered to industrial plants, with the city government declining to comment to Reuters on the matter.
“It is getting harder to guess what step the government will take next. We think prices will remain volatile before new driving forces appear on either the supply- or demand-side,” analysts from Huatai Futures said in a note.
Meanwhile, Jiangsu Shagang Group, the biggest privately-owned steel mill in China, has raised its rebar and steel wire prices for September 1-10 delivery by 80 yuan per tonne.
According to the Hebei Metallurgical Industry Association, the steel purchasing managers’ index (PMI) dipped to 48.8 in August, its third straight month below 50, indicating contraction on a monthly basis in the sector amid falling output and decreasing exports.
“Due to escalated environmental curbs, steel production continued to be restrained ... We expect output curbs may be strengthened in steel sectors while demand in downstream sectors will generally be positive,” the association said in a statement.
Prices of steelmaking ingredients were mixed on Tuesday. The most-traded iron ore futures on the Dalian Commodity Exchange were steady at 483 yuan a tonne.
Contracts held by investors in China’s iron ore futures have fallen to the lowest in more than three years, and trading volumes have nearly halved since May, as investors turned to other commodities due to flat prices in recent months.
The Dalian coking coal contract for January delivery dipped 0.9 percent to 1,228 yuan a tonne on Tuesday.
Coke prices fell 1.3 percent to 2,363 yuan a tonne, after declining as much as 4 percent in the previous trading session.
$1 = 6.8151 Chinese yuan renminbi Reporting by Muyu Xu and Josephine Mason Editing by Joseph Radford