Chinese steel rebar and hot rolled steel futures closed at an all-time high on Tuesday, rising 6.7% and 7.7%, respectively, as concerns over production cuts and peak demand seasons overshadowed stock market fee adjustments.
The state agency has called on local governments to complete a “self-review” of their steel projects and an annual production cut plan by mid-May, before it carries out on-site inspections in June and July.
The announcement, seen as an encouragement to increase production of rough steel, came as factory prices in China rose at the fastest pace in more than three years last month.
“The current demand for building materials is still high … domestic hot rolled coil prices are also driven by the surge in overseas markets,” writes an analyst at CITIC Futures.
The most popular construction rebar on the Shanghai Futures Exchange for October delivery rose in its sixth session to close 4.6% up to 6,086 yuan ($ 947.15) a tonne.
Hot rolled coils, used in the manufacturing sector, jumped to 6,591 yuan a tonne during the day, before closing 6.9% above the 6,540 yuan mark.
The September contract for underlying iron ore futures on the Dalian Mercantile Exchange rose for the fourth straight session. It rose 1.7% to 1,307 yuan a tonne.
Spot prices for 62% iron ore for delivery to China on Monday rose $ 19 to $ 231 a tonne, according to consulting firm SteelHome.
“Most market participants believe that the growth was a speculative move,” – said in a statement ING Economics.
But optimism about supportive policies and strong demand will support the iron ore market, he added.
Dalian coking coal rose 2.1% to 2,028 yuan a tonne, while coke futures fell 2.9% to 2,828 yuan.
Stainless steel shipments in Shanghai for June delivery rose 1.6% to RMB 15,395 a tonne.