Chinese steel prices hit 5-week high

Steel prices in China hit a five-week high on Thursday amid expectations of higher demand as the government takes steps to bolster the economy and fears that supply may shrink as winter production holds back volumes.

Construction demand outlook was supported as two cities in China eased restrictions designed to contain the real estate coup - the latest sign of local government efforts to revive property sales.

Meanwhile, China's central bank on Wednesday rolled out policy targeting to stimulate lending to small and private firms.

“Policymakers have taken more steps to ease the economic pressure from the downtrend, which will help further boost market sentiment,” analysts at Huatai Futures said.

Rebar prices in Shanghai rose 1.8 percent to 3492 yuan ($ 506.09) a tonne, last seen on November 16. It was 1.5 percent at 3481 yuan.

Expectations for more limited supplies have also helped lift the Chinese ferrous market, as leading steel center Hebei predicts it will be able to cover the entire region from December 20-24.

At least three cities in Hebei province, including the provincial capital, Shijiazhuang, have ordered industries and miners to restrict activities to reduce toxic emissions, the state bureau said.

Cities in northern China recently ordered steel mills to cut production by the end of the year as local authorities struggle to meet annual air quality targets.