China’s Steelmaking Raw Materials Dip Over New Round Of Production Curbs

- Jul 17, 2018-

Chinese steel making raw materials were generally weaker on Monday, pressured by worries over waning demand after a new round of production curbs in the country’s top steelmaking city.

Tangshan city in the northern province of Hebei ordered steel mills on Friday to shut sintering plants for five days from July 13 to 18 due to forecasts of heavy smog.

The closure of sintering plants will reduce demand for iron ore fines, which are heated into a mass as a precursor to making hot metal.

The most-active iron ore futures on the Dalian Commodity Exchange initially dipped as much as 1 percent before recovering to close up 0.3 percent at 466 yuan ($69.66) a tonne.

Weekly utilisation rates at blast furnaces at steel mills across China fell 0.7 percentage points from the previous week to 70.86 percent as some mills started maintenance, data from Mysteel showed.

Stockpiles of imported iron ore at Chinese ports increased 96,600 tonnes to 153.52 million tonnes last week as of July 13 from prior week, Mysteel data showed.

China’s iron ore imports fell 11.6 percent in June from the previous month, reaching 83.24 million tonnes last month, according to customs data, as Beijing intensified a push to curb air pollution.

Dalian coking coal fell 0.5 percent to 1,138.5 yuan a tonne. Coke futures fell 2.7 percent to 2,001.5 yuan a tonne.

Shanghai benchmark steel rebar futures closed 0.4 percent lower to 3,958 yuan on Monday after five days of gains last week.

The world’s second-biggest economy reported a slower pace in economic growth during the second quarter on Monday with activity expanding by 6.7 percent as the government’s efforts to tackle debt risks crimp activity and a trade war with United States threatens exports.

Demand for steel products could also be dampened by heavy rain and thunderstorms wreaking havoc across China. State television reported that floods had caused direct economic losses of 25.9 billion yuan.

The China Meteorological Administration (CMA) on Monday issue rainstorm alerts for July 16 to 18 in southwestern, southeastern and northern China.

On Monday, China reported record daily steel output for a third month in a row in June, as producers rushed to cash in on hefty margins.

Spot steel prices edged up 0.2 percent to 4,350.51 yuan a tonne on Friday, Mysteel data showed.
Source: Reuters (Reporting by Muyu Xu and Josephine Mason; editing by Richard Pullin and Christian Schmollinger)