* Iron ore, coking coal retreat after hitting multi-week highs (Updates prices)
By Manolo Serapio Jr
MANILA, Nov 27 (Reuters) - Shanghai steel futures climbed to a six-week high on Monday, supported by expectations that Chinese demand will remain firm into the new year, lifting prices of steelmaking ingredients iron ore and coking coal to similar multi-week peaks.
But iron ore and coking coal later surrendered early gains to end lower.
Prices in the world’s largest steel consuming country will continue to remain strong in 2018 with supply and production becoming more balanced, an official from the China Iron and Steel Association (CISA) said last week, according to a report by the official Xinhua news agency.
China’s tighter environmental rules will curb steel output in 2018, and should help extend this year’s strength in steel prices that allowed loss-making producers to make money, Gu Jianguo, deputy head of CISA, told an industry forum on Friday.
The most-active rebar for May delivery on the Shanghai Futures Exchange closed up 1 percent at 3,833 yuan ($580) a tonne. The construction steel product hit an intraday peak of 3,888 yuan, its highest since Oct. 16.
Iron ore on the Dalian Commodity Exchange climbed as far as 516.50 yuan per tonne, its strongest level since Sept. 20, but closed 0.6 percent lower at 505 yuan.
Iron ore traders continue to bet on a rebound in demand after the winter production curbs on steel mills around Beijing, ANZ analysts said in a note.
“With steel mills keen to meet demand from operations not affected by the closures, demand for higher quality iron ore is a way to boost output without restarting capacity,” ANZ analysts said in a note.
Steel production in northern China remains constrained by limits imposed by Beijing as part of its fight against smog, restrictions that are expected to be in place through March.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB rose 0.4 percent to $67.94 a tonne on Friday, its loftiest since Sept. 20, according to Metal Bulletin. The spot benchmark gained 8.5 percent last week, its biggest such increase since early July.
Dalian coking coal touched 1,344 yuan a tonne, its highest in more than 10 weeks, before ending 0.2 percent weaker at 1,314 yuan a tonne. Coke closed 0.5 percent higher at 2,006.50 yuan a tonne, off a nine-week peak of 2,045.50 yuan hit earlier in the session. ($1 = 6.6057 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Sherry Jacob-Phillips and Sunil Nair)