Posted on 26 Apr 2021
The futures prices of steel products in China increased Yuan 168/tonne ($25.9/t) over April 19-23 week from the settlement price one week earlier, in response to news that production restrictions are to also be applied to steelmakers in Handan, North China’s Hebei province, market watchers noted.
The most-traded rebar contract on the Shanghai Futures Exchange for October delivery closed at Yuan 5,299/t by the end of the daytime trading session on April 23.
On April 21, the Handan government issued a plan aimed at controlling production at key industrial enterprises including steel producers over April 21-June 30 as a means of reducing air pollution, Mysteel Global noted. The plan also included detailed criteria by which a mill's environmental protection performance would be evaluated.
“Its impact will be huge!” warned an official from a mill in Wu’an city, a county-level city under the jurisdiction of Handan city. “Curbs of differing degrees of severity will be imposed on the mills, but now, all of us are producing at full capacity,” he explained Friday, adding that the orders would be issued over the past two days.
However, a Handan mill official reckoned that his company has not received any official notice, and believed that its production will be little influenced. “This time, it seems that the policy may be targeting mills in Wu’an with poor environmental protection performances,” he stated.
But a futures analyst in Shanghai maintained that the declines in production could not be in Hebei alone. “The tougher curbs in Hebei are seen as a prelude to the cut in total production this year. However, the handsome profits they’re earning would stimulate mills in other regions to boost production as much as they can, which will also drive up raw materials prices,” he commented.
On April 23, the most-traded iron ore contract on the Dalian Commodity Exchange for September delivery moved up Yuan 53/t from the settlement price on April 16 to close the daytime trading session at Yuan 1,104.5/t.
“The persistence of robust demand depends on the financial status of construction companies,” a steel trader in East China stated, adding that steel demand in North and East China remains good.
Source:Mysteel Global
