China's steel futures edged lower on Friday and posted their second weekly drop amid signs that steel output in the world's top producer will remain high, pushing prices of raw material iron ore to a one-week peak. The most actively traded rebar on the Shanghai Futures Exchange closed down 0.2 percent at 3,933 yuan ($566) a tonne, and lost 2.9 percent for the week. The construction steel product touched a 3-1/2-month low of 3,878 yuan on Thursday.
"China's steel production may not show any signs of weakening when the winter season starts from mid-November as China's government will exercise flexibility in reining in production ... as the pollution control (efforts have) made some progress," Argonaut Securities analyst Helen Lau said in a note.
Ditching blanket production curbs imposed last winter, China has given cities and provinces the flexibility to set their own restrictions this year based on their emission levels.
Data from the China Iron and Steel Association showed that average daily crude steel production at its member mills stood at 1.97 million tonnes over Oct. 1-20, nearly matching September's 1.98 million tonnes.