Chinese steel futures rose for a fifth session on Thursday to reach their highest in nearly three months, buoyed by expectations that more northern cities could continue cutting output this year. China's top steelmaking city of Tangshan has proposed fresh restrictions on production for 244 days beyond the winter heating season, raising expectations that other northern cities with heavy air pollution could follow.
"Tangshan itself may not have a big impact on supplies, but other regions are likely to take similar measures, so market sentiment is positive for now," said a senior research manager with a trading firm in Hangzhou. Meanwhile, demand is seen improving from mid-March after slowing during winter as construction activity declined, while the Lunar New Year holiday in February also helped crimp appetite.
"Demand has started to warm, but big improvement is expected in mid- and late-March, so the gains in prices are capped (for now)," the manager said. The most active rebar on the Shanghai Futures Exchange had risen 0.3 percent to 4,032 yuan ($635.51) a tonne by close. It earlier hit an intraday high of 4,062 yuan, it's strongest since December 5. Iron ore on the Dalian Commodity Exchange climbed 0.3 percent to 544.5 yuan a tonne. Coke edged up 0.4 percent to 2,258.5 yuan a tonne and coking coal dropped 1 percent to 1,401 yuan a tonne. Iron ore for delivery to China's Qingdao port inched down 54 cents to $78.61 a tonne on Wednesday, according to Metal Bulletin.
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