So there extending the production cuts through March, dam I thought that this could be the case. Will be interesting to see how it effects the iron ore price in the coming months
UPDATE 1-Shanghai rebar hits 3-month high amid Tangshan curbs, raw materials rally
Reuters Staff
3 MIN READ
* Tangshan to cut utilisation rates March 16-Nov 14
* Tangshan accounts for 12 pct of China’s steel output
* Iron ore climbs to multi-week highs, coke at 5-month top (Adds Tangshan order, Marex Spectron comment, updates prices)
By Manolo Serapio Jr
MANILA, Feb 26 (Reuters) - Chinese steel futures jumped more than 3 percent to their strongest level in almost three months on Monday after China’s top steelmaking city said it will extend output curbs over the next eight months after the end of the winter heating season.
China’s plan for President Xi Jinping to stay in office indefinitely also buoyed investor sentiment, spurring hopes for policy continuity, despite social media opposition.
“The repeal of the term limit rule for Chinese presidents has also given regional risk a broad lift with Xi Jinping deemed likely to stay on and continue the growth program and thus provide stability through continuity,” said Matt France, head of institutional sales for metals in Asia at Marex Spectron.
The most-active May rebar contract on the Shanghai Futures Exchange rose as far as 4,047 yuan ($641) a tonne, its highest since Dec. 5, before closing up 3.3 percent at 4,028 yuan.
Tangshan in northern Hebei province said earlier this month that it would extend restrictions on production after the end of the winter heating season on March 15. Tangshan accounts for about 12 percent of China’s steel output.
The Tangshan government is planning to ask mills in the city to cut their utilisation rates by 10-15 percent from March 16 to Nov. 14 in a bid to improve air quality.
“The order could signal further restrictions to northern China’s industrial production outside of the heating season,” said Vivek Dhar, analyst at Commonwealth Bank of Australia.
China had ordered 28 cities in its northern region to cut steel output by up to half during the winter heating season from Nov. 15 to March 15 as part of its anti-pollution campaign.
“While reduced steel production in Northern China is certainly positive for steel prices, it is negative for physical iron ore consumption,” analyst Dhar said in a note.
“The two opposing forces likely means a volatile year in iron ore markets in 2018. The lower utilisation rates will likely see Chinese mills continue to target productivity, maintaining a preference for high-grade ore.”
But Monday’s spike in steel prices lifted iron ore and coking coal futures, although iron ore underperformed the complex.
The May iron ore contract on the Dalian Commodity Exchange closed 1.3 percent higher at 549 yuan per tonne, off a session peak of 556.50 yuan, its loftiest since Jan. 12.
Coking coal was up 2.3 percent at 1,412 yuan a tonne, after touching 1,431 yuan, its highest since Dec. 4. Coke climbed 4.1 percent to 2,279 yuan per tonne, after peaking at 2,293 yuan, its strongest since Sept. 21. ($1 = 6.3130 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Gopakumar Warrier and Subhranshu Sahu)
https://af.reuters.com/article/commoditiesNews/idAFL4N1QG2P
