Steel prices have started to rally again, after losing steam last week, as traders returned their focus to planned steel production cuts. On Monday, China rebar futures jumped 4%, boosted by both planned steel production cuts and optimism over seasonal demand.
According to Reuters, steel producers in the Hebei-Beijing-Tianjin area have been asked to shift their peak-load production to reduce pollution ahead of the start of China’s National People’s Congress on Friday. The cutback in production ahead of the Congress was anticipated, but it also brings back to the forefront the fact that the country is serious when it comes to reducing pollution. Previously, the country announced that it would crack down on industries that were heavy polluters in order to reduce emissions.
Also supporting prices was the first decline in steel inventories since November. Steel inventory held by Chinese traders fell to 16.29 million tons as of Feb. 24 from 16.39 million tons in the prior week.
On Monday, the most-active rebar on the Shanghai Futures Exchange climbed as high as 3,648 yuan, its highest price point since February 24, according to Reuters.
Meanwhile, steel producers are still dealing with soaring input costs, and on Sunday China Steel Corp. raised steel prices by 6.9% for deliveries in the second quarter. The company cited higher raw material costs as the sole reason behind the price hike. This is not the first price increase due to higher prices. Other steel producers have already raised prices, and more hikes are expected. China Steel Corp. also noted that it has been running its steel furnaces at full capacity so far this year, in order to meet demand for the commodity.
Source: Economic Calender
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