July 30, 2018 / 2:27 AM / a year ago

Shanghai rebar hits 5-1/2 year high on supply worries

BEIJING (Reuters) - Chinese rebar steel futures rose to a 5-1/2 year high on Monday, as markets worried about tight supplies due to an increase in production curbs aimed at combating pollution.

The most-active construction rebar futures on the Shanghai Futures Exchange rose as much as 1.9 percent to 4,146 yuan ($607.92) a tonne, a level last seen in mid-February 2013. Rebar closed up 1.5 percent at 4,130 yuan a tonne on Monday.

All sintering machines and shaft furnaces at steel mills in Tangshan, the country’s top steelmaking city in Hebei province, have been ordered to shut down from July 27 to July 31, to check pollution, according to reports from industry websites.

The latest curbs come on top of a government order cutting production from sintering and blast furnaces for six weeks during the summer season.

The weekly utilization rate at blast furnaces at steel mills across China fell 3.59 percentage points to 67.4 percent in the week to July.27, the lowest level since late April, according to data compiled by Mysteel consultancy.

According to industry websites, the city of Changzhou in Jiangsu, China’s No.2 largest steelmaking province, is planning to cut emissions at industrial plants in steel, non-ferrous and cement sectors by 50-100 percent. No timeframe was given for the production curbs.

Spot rebar prices rose 0.5 percent to 4,394.38 yuan a tonne on Friday, according to Mysteel.

The most-traded iron ore contract on the Dalian Commodity Exchange climbed 0.6 percent to 488.5 yuan a tonne on Monday after reaching as peak as 493.5 yuan, its highest since May 15.

Stockpiles of imported ore continued to fall last week. Inventories declined by 197,500 tonnes to 153.45 million tonnes on Friday, data compiled by Mysteel showed.

China’s major coal-producing province of Shanxi is also carrying out regional environmental checks ahead of intensified central inspections next month, which could curb operations in steel mills and coal mines.

Other steelmaking raw materials also rose alongside steel rebar. Dalian coke futures soared as much as 4.9 percent to 2,287 yuan a tonne, their highest since September 2017, before market close.

Coking coal futures was little changed at 1,196.5 yuan.

Reporting by Muyu Xu and Josephine Mason; editing by Richard Pullin and Sunil Nair

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