SINGAPORE (Reuters) - China’s construction steel rebar prices rose more than 3 percent on Friday to their highest since February 2013, buoyed by strong demand, dwindling stocks and signs of more production curbs in the country’s top steelmaking center.
The most-active rebar contract on the Shanghai Futures Exchange ended up 3.1 percent at 4,126 yuan ($606.54) a tonne, its highest close since Feb. 18 2013.
The market has been betting on tighter supplies due to stringent production curbs in Tangshan, the country’s top steelmaking city in Hebei province, which has imposed a series of temporary restrictions this month.]
Industry website SMM reported on Friday that all sintering machines and shaft furnaces in Tangshan would have to shut down from noon on July 27 until midnight on July 31 due to pollution, sending prices higher.
Falling inventories were also fuelling the rally. Chinese steel product inventories fell by 104,700 tonnes to 9.89 million tonnes as of Friday from a week earlier, data from Mysteel consultancy showed.
Stocks of construction steel rebar fell by 1.8 percent to 4.48 million tonnes and hot-rolled coil stocks slipped by 0.7 percent to 2.11 million tonnes.
Iron ore on the Dalian Commodity Exchange rose as much as 3.7 percent on Friday to its highest since May 15 before closing up 3.5 percent at 491.5 yuan a tonne.
Spot iron ore for delivery to China rose 0.4 percent to $66.3 a tonne on Thursday, according to Metal Bulletin.
Other steelmaking materials also advanced on Friday. Coke ended up 4.1 percent at 2,221 yuan a tonne, its highest close since March 1, and coking coal ended up 0.4 percent at 1,195.50 yuan a tonne.
For the week, rebar posted a gain of 2.2 percent while iron ore added 3.4 percent.
“The China Iron & Steel Association warned that the industry had enjoyed much stability in the first half, however it warned that this wasn’t guaranteed to continue,” ANZ said in a note.
“It did point out that demand remains strong, with production at high levels, which is forcing inventories to fall.”
Reporting by Naveen Thukral and Tom Daly in BEIJING; Editing by Sunil Nair