China’s construction steel rebar prices recovered from a multi-month low despite record-high steel output in October, as investors expected further push from Beijing to stimulate the economy amid mixed economic data.
The country produced a total of 82.55 million tonnes of crude steel in October, the highest level in at least eight years, the National Bureau of Statistics (NBS) data showed, suggesting steel mills were maintaining high-working load ahead of winter production curbs.
“Operations at steel mills are likely to face more relaxed restrictions this winter…When supply is not a major issue, demand from downstream sectors will be the crucial element to affect the market,” said Richard Lu, analyst at CRU in Beijing.
Fixed-asset investment growth quickened to 5.7 percent in the January-October period, suggesting Chinese policymakers are fast-tracking infrastructure projects, according to the NBS data.
However, growth in October real estate investment eased to a 10-month low and home sales fell again as developers held back expansion plans in the face of softening demand, according to the NBS data.
Meanwhile, credit growth in the world’s second largest economy slowed sharply in October, with household loans falling to 563.6 billion yuan from 754.4 billion yuan in September, data from the central bank showed on Tuesday.
“(The data) suggests an increasing downstream economic pressure in the future…We expect more policies will come out to ease the pressure,” analysts from Huatai Futures said in a note.
Steel inventory at Chinese steel mills continued to reduce last week as of Nov. 9 to 8.91 million tonnes, a level last seen in mid-January, according to data compiled by Mysteel consultancy.
Benchmark construction steel rebar prices rose 1.5 percent to 3,926 yuan ($564.99) a tonne when market closed for lunch break at 0330 GMT, also driven up by a temporary supply disruption after top steelmaking province Hebei issued an orange smog alert asking steel mills to halve operations from Nov.12 to Nov.15.
The most-traded iron ore futures for January delivery on the Dalian Commodity Exchange fell 1 percent to 510.5 yuan a tonne.
Coking coal prices rose 1.2 percent to 1,364 yuan a tonne, while coking coal futures gained 1.9 percent to 2,351 yuan.
Source: Reuters
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