China copper smelters plan to cut output after margins fall
The output cuts underscore the industry’s struggle with a shortage of feedstocks caused by recent mine production setbacks.
Prices of steel rebar, coke, and coking coal jumped on Friday as the key steel city of Handan in northern China announced new curbs in its fight against pollution, while investors covered short positions to close out the month and first quarter.
The most active rebar contract on the Shanghai Futures Exchange closed up 4.4 percent at 3,391 yuan ($540.62) a tonne, surging late in the session after Hebei province announced a 25 percent production cut on Handan’s steel and coking sectors from April 1 to Nov. 15 this year.
Despite the big jump on the last trading day of the quarter, rebar’s biggest daily gain since Aug. 7, 2017, it still recorded a 12.4 percent drop for the first quarter, its first quarterly decline since the fourth quarter of 2015, lead by a 17.3 fall in March.
Meanwhile, the most traded coking coal contract on the Dalian Commodity Exchange ended up 5.8 percent at 1,281.50 yuan per tonne, its biggest one-day gain since Nov. 4, 2016, while coke closed up 3.4 percent at 1,822 yuan per tonne.
Coking coal has still notched up an 11.2 percent loss this month, its biggest monthly loss since September and its first quarterly drop since the second quarter of last year.
End-of-quarter window dressing earlier triggered a bout of short covering in rebar and its ingredients, analysts said. China is the world’s top steel producer.
The market had been “oversold and is rebounding,” said Zhao Xiaobo, an analyst at Sinosteel Futures in Beijing.
Hefty tariffs slapped on steel imports by Washington and a growing trade dispute with the United States were worsening the outlook for steel, as inventories rise and a revival in demand after the week-long Spring Festival in February has failed to emerge.
Production has also increased after China’s pollution controls expired on March 15.
Inventories of rebar, used in construction, rose to their highest since April 2013 in the week ending March 16, according to data from SteelHome, but have declined some since then and stand at 9.5 million tonnes.
Dalian iron ore closed up 1.6 percent at 443.5 yuan a tonne but still marked its steepest quarterly drop since the third quarter of 2015 at 17.4 percent.
Shanghai iron ore port stocks have surged to more than 160 million tonnes, a record high and have doubled in size since late 2015. ($1 = 6.2724 Chinese yuan).
Reporting by Josephine Mason and Tom Daly; Editing by Christian Schmollinger and Sunil Nair.
