Shanghai construction steel rebar futures climbed on Thursday to their highest in 10 months on concerns over supplies after China curbed production in top steelmaking cities in an effort to reduce pollution. The most-active rebar contract on the Shanghai Futures Exchange finished up 0.6 percent at 3,963 yuan ($587.35) a tonne. Earlier in the session, the market climbed above 4,000 yuan a tonne for the first time since Sept. 4.
China's top steelmaking city Tangshan has extended recent emergency pollution control measures until July 21 because of a possible major smog alert. Wu'an, a major steelmaking region in Hebei's Handan city, has ordered steel mills to shut all sintering machines and shaft furnaces from July 19 to July 22 to control pollution, according to a document reviewed by Reuters but could not be verified with local authorities.
Coke producers were also asked to reduce production during that period in Handan, which accounted for 5 percent of the country's output last year. "Investors have been buoyed by the efforts by Chinese authorities to continue to close underutilised steel capacity," ANZ said in a note. "The subsequent rise in steel prices continues to support iron ore. The host of company reports showing strong growth in production didn't seem to worry the market."
Anglo-Australian miner BHP Billiton Ltd said iron ore production in its fiscal fourth quarter rose 3 percent as productivity improved, cementing a record annual output as it set a bigger target for the current year. Steelmaking raw materials gained on the back of higher rebar prices. Iron ore on the Dalian Commodity Exchange closed 0.3 percent higher to 467.5 yuan a tonne after earlier climbing to 474 yuan a tonne, the highest since July 2.
Coke rose 0.7 percent to 2,021 yuan a tonne and coking coal gained 1.4 percent to 1,160.50 yuan a tonne. Russian steel producers played down the impact of the European Union's curbs on steel imports on Wednesday, which, according to analysts, may even allow some of them to increase supplies to the bloc compared with a year ago. On Thursday, the EU will set the quotas for 23 steel product categories at the average of imports over the past three years, with a 25 percent tariff set for volumes exceeding those amounts.