Prices of rebar and hot-rolled coil in China, the world’s top steel producer, rose to record highs on Thursday, underpinned by strong demand at home and overseas and helping sustain the high level of profitability enjoyed by mills.
Rebar on the Shanghai Futures Exchange ended daytime trade 1% higher at 5,208 yuan ($803.16) a tonne, after earlier hitting 5,238 yuan, the highest since 2009 when trading of construction steel contracts began on the bourse.
Hot-rolled coil was up 2.3% at 5,552 yuan a tonne, after touching 5,579 yuan, its strongest since 2014 when trading of contracts for steel used in car bodies and home appliances started.
Strong demand for steel products at a time when China is moving to cut output by curbing operations of highly pollutive blast furnaces, and possible further restrictions, pushed margins higher, prompting mills to ramp up production.
Crude steel output among the 318 Chinese steel mills under Mysteel consultancy’s regular survey rose to an average of 2.92 million tonnes a day over April 11-20, the highest since mid-January.
Against the backdrop of “the dual momentum of production restriction and peak season demand, the market continues to operate in a bullish atmosphere”, Sinosteel Futures analysts said in a note.
Prices of billets in Asia, for instance, have reached the highest level in nearly nine years, propelled by strong demand particularly from the Philippines, which imports the product mainly from China, they said.
September iron ore on China’s Dalian Commodity Exchange slipped 0.5% after a five-session rally. The steelmaking ingredient’s May contract on the Singapore Exchange slumped 1.1% by 0705 GMT.
The benchmark 62% iron ore’s spot price in China was $188.50 a tonne on Wednesday, the highest on record or since 2011, based on SteelHome consultancy data.
Dalian coking coal leapt 2.1%, while coke advanced 1.6%.
Shanghai stainless steel shed 0.3%.
(By Enrico Dela Cruz; Editing by Subhranshu Sahu)