China steel marks second weekly fall amid ample supply
MANILA – China's steel futures edged lower on Friday and posted their second weekly drop amid signs that steel output in the world's top producer will remain high, pushing prices of raw material iron ore to a one-week peak.
The most actively traded rebar on the Shanghai Futures Exchange closed down 0.2 percent at 3,933 yuan ($566) a tonne, and lost 2.9 percent for the week. The construction steel product touched a 3-1/2-month low of 3,878 yuan on Thursday.
The absence of across-the-board limits will make it difficult to determine the actual impact on production this winter
"China's steel production may not show any signs of weakening when the winter season starts from mid-November as China's government will exercise flexibility in reining in production … as the pollution control (efforts have) made some progress," Argonaut Securities analyst Helen Lau said in a note.
Ditching blanket production curbs imposed last winter, China has given cities and provinces the flexibility to set their own restrictions this year based on their emission levels.
Data from the China Iron and Steel Association showed that average daily crude steel production at its member mills stood at 1.97 million tonnes over Oct. 1-20, nearly matching September's 1.98 million tonnes.
Iron ore on the Dalian Commodity Exchange hit a one-week high of 530.50 yuan per tonne, before settling at 525 yuan, up 1.9 percent. The January contract gained 2.5 percent this week, its fourth increase in five weeks.
China's iron ore imports rose 11.2 percent from a year ago to 88.4 million tonnes in Oectober, government data showed on Thursday.
Coking coal slipped 0.3 percent to 1,343.50 yuan a tonne and coke eased 0.3 percent to 2,351 yuan.
($1 = 6.9466 Chinese yuan)
(By Manolo Serapio Jr., Editing by Sherry Jacob-Phillips)