BEIJING (Reuters) - Shanghai rebar futures recovered from early falls on Friday, extending gains into a third session and marking their biggest weekly jump in seven on concerns about lean supply.
The top Chinese steelmaking city of Tangshan ordered steel mills, coke producers and utilities to cut output further from July 20 until Aug. 31, in addition to the 10 percent-15 percent cuts imposed from March to November.
Tangshan did not instruct factories on how much output should be reduced, but the market expects sintering production, a process where iron ore is heated to make hot metal, to be curbed by 30 percent-50 percent.
Meanwhile, Wu’an city in Hebei province also asked steel mills to shut sintering machines from July 19-22 to lower emission levels during an expected smog period.
The most-active rebar futures closed little changed at 3,985 yuan ($588.33) after declining as much as 0.9 percent in early trade.
Hot-rolled coil contracts closed at 4,061 yuan.
Spot steel prices rose 0.4 percent to 4,352.69 yuan a tonne on Thursday, according to Mysteel.
Despite firm prices, the steel market is under pressure from rising stockpiles.
Weekly stockpiles of steel products rose 29,500 tonnes from a week earlier to nearly 10 million tonnes on Friday, Mysteel data showed, a sign of waning demand as the off-peak season approaches.
Rebar inventory dropped 0.35 percent to 4.56 million tonnes, while hot-rolled coil stocks rose 2.5 percent to 2.13 million tonnes.
“Chinese domestic demand for metals, including steel and aluminum, will slow down in the second half of 2018 and 2019 in general, as construction and infrastructure projects start to thin out with the easing of government fiscal support,” according to BMI Research.
Steelmaking raw material prices went up on the back of rising steel prices and tightened production.
The most-traded iron ore contract for September delivery on the Dalian Commodity Exchange rose 0.4 percent to 472.5 yuan a tonne.
Dalian coking coal climbed 0.9 percent to 1,166.5 yuan a tonne, while coke futures closed 1.4 percent higher at 2,054.5 yuan a tonne.
($1 = 6.7734 Chinese yuan)
Reporting by Muyu Xu and Josephine Mason, Editing by Sherry Jacob-Phillips and Subhranshu Sahu