Shanghai Steel Prices Rise

The value of rebar futures in Shanghai has risen substantially, supporting robust demand for the winter, when construction tends to slow in northern China due to tough conditions and pollution control regulations.

Stocks of metal products at Chinese traders fell 370,000 tons to 10.3 million tons per week until Oct.19, according to data compiled by Mysteel.

Mysteel said rebar inventories fell 6.4 percent to 4.12 million tonnes this week, while hot rolled coil inventories rose 0.8 percent to 2.4 million tonnes.

“We believe that demand remains strong in the near term, while consumption from the construction sector is skyrocketing, indicating that people are actively working before winter arrives,” said analysts at Huatai Futures.

Construction activity usually slows down significantly in northern China during the winter, as weather conditions close many construction sites.

The most active rebar contract on the Shanghai Futures Exchange closed 0.2 percent at 4,142 yuan ($ 597.03) a tonne on Tuesday.

Long-term economic and industry research firm Fitch Solutions expects steel demand in China to remain stable throughout the remainder of the year and into 2019 amid a surge in infrastructure spending.

Steel prices were mixed. Dalian iron ore futures for January rose 0.4 percent to 519.5 yuan a tonne.

Dalian coke futures remained little changed at 2,378 yuan a tonne, while coking coal rose 1.2 percent to 1,388.5 yuan amid stock problems following Monday's Shandong coal mine accident that killed three people.

Weekly utilization rates for blast furnaces at steel mills across the country fell 0.28 percentage points in the week to October 19 from a week earlier, triggered by emergency pollution control measures in Hebei province, according to Mysteel. However, rates still hit 68.37 percent.

The major steel city of Tangshan has released detailed plans to cut production at selected steel mills, but has not yet instructed manufacturers to begin enforcing the rules.