Steel prices in China surge to record highs

Backed by a strong demand in the country and abroad, the prices of rebar and hot-rolled coil in China witnessed an all-time high. China is the world’s biggest steel producer and this increase in price is helping maintain the high level of profitability being enjoyed by the mill owners in China.

This is how the statistics stood: rebar on the Shanghai Futures Exchange saw the day trade ending 1% higher at 5,028 yuan ($803.16) a tonne. Before that the prices hit 5,238 yuans which was the highest since 2009 when trading of construction steel began.

Meanwhile, hot rolled coil too witnessed a surge. It was up 2.3% at 5,552 yuan a tonne after reaching 5,579 yuan. This was the strongest rebar rose since 2014. This was the time when trading of contracts for steel used in the car bodies and home appliances started.

The strong demand for steel products is significant at a time when China is taking measures to decrease the output of steel by imposing restrictions on operations of the highly polluting blast furnaces. This has also pushed the profit margins of the mills higher and also thus getting mills to boosting production.
It is to be noted that the crude steel output among the over 300 Chinese steel mills increased by over 2.92 million tonnes a day. The increase was observed during the period between April 11-20. This was the highest reported since the middle of January. The figures were released as part Mysteel consultancy analysis. The agency’s figures hold relevance as it is well versed with the ups and turns of the market.
Experts say the market is currently operating in a volatile atmosphere. Analysts noted that the market atmosphere changes have to be read against the backdrop of the doubled paced production restriction and the demand that has peaked. All these together are impacting the market conditions.

Billets, a section of metal used for rolling into bars, rods or sections in the steel industry too witnessed a price high. This was the highest it reached in nearly nine years. The increase in demand has been fuelled by a strong demand particularly from the Philippines, which is known to import the product mainly from China.

Meanwhile, the September iron ore on China’s Dalian Commodity Exchange was down 0.5%. This was reported after a five-session rally of the material. The May contract on the Singapore Exchange also fell 1.1% for the raw material that is used to make steel.

The SteelHome Consultancy data after studying prices and analysing the market weather revealed that the benchmark 62% iron ore’s spot price in China stood at $188.50 a tonne. This was the highest to be recorded since 2011. Meanwhile, Dalian coking coal too witnessed a jump of 2.1%, and coke surged 1.6%. On the other hand Shanghai steel slipped by a minimal of 0.3%.

China produces more pig iron with lesser impurities as compared to low-grade materials as Chinese demand for top-quality iron has grown stronger. This has allowed steel mills to meet pollution adherence standards stipulated by the government while at the same time ensuring good output.

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