BEIJING (Reuters) - China’s steel rebar prices edged down on Thursday, dragged by concerns over relaxed implementation of winter production restrictions in the northern part of the country.
As part of China’s war against air pollution, heavy industries in at least 28 cities in the smog-prone region of Beijing-Tianjin-Hebei were ordered to rein in their operation from Nov. 15 to March 15, 2019.
The top steel-making city of Tangshan in Hebei province is expected to cut production at an average 30-35 percent based on emission levels at individual steel mills.
Meanwhile, Hebei government this week issued emergency smog alert until Nov. 15 due to heavy air pollution, asking all mills who do not meet ultra-low emission targets to shut their sintering machines and shaft furnaces.
“More steel mills have decided to halt operation because of (emergency measures) in the smog weather, which helped to shore up market sentiment, but air quality will be improved soon,” said analysts at CITIC Futures in a note in Mandarin.
They also warned of weak implementation of production restrictions at mills, which would lead to a glut in the market, pressuring prices.
The most-active construction steel rebar futures for January delivery on the Shanghai Futures Exchange closed 0.2 percent lower at 3,889 yuan ($560.88) a ton.
The output curbs during winter season helped to lift prices of steel-making raw materials.
Dalian coking coal futures rose 2.5 percent to 1,382 yuan a ton, while the most-traded coke contract gained 2.5 percent to 2,382 yuan.
“Despite production restrictions, steel mills still try to churn out as much as products they can to cash out fat profits ... Therefore, replenish demand for raw materials at mills remains very strong but supply is tight as coke plants are also under winter curbs,” said a Beijing-based coke trader.
Iron ore prices closed 0.9 percent firmer at 513.5 yuan.
Reporting by Muyu Xu and Dominique Patton; Editing by Gopakumar Warrier and Sherry Jacob-Phillips