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Construction material steel rebar and hot-rolled coils (HRC), used in the manufacturing sector, were trading higher on Wednesday amid supply concerns after top steelmaking city Tangshan implemented a temporary lockdown.
The Tangshan government implemented a temporary lockdown on Tuesday to avoid further cases of COVID-19 as infections surged, the local government said in a statement.
“Although consumption for steel products are relatively sluggish, but production is also falling,” analysts with Huatai Futures wrote in a note.
The situation of tight raw materials inventories has not been reversed yet, which could further sustain steel prices, it added.
Most-traded steel rebar on the Shanghai Futures Exchange SRBcv1, for May delivery, jumped 1% to 4,983 yuan ($154.21) a tonne when market closed.
Hot-rolled coils SHHCcv1, used in cars and home appliances, inched up 0.4% to 5,189 yuan per tonne.
Stainless steel prices SHSScv1 on the Shanghai bourse ended 2.8% higher to 20,415 yuan a tonne, after raw material nickel showed signs of normalising. They were up as much as 3.7% earlier during the session.
Steelmaking ingredients on the Dalian Commodity Exchange were mixed after falling more than 3% during night session, with benchmark iron ore DCIOcv1 edging up 0.4% to 823 yuan a tonne.
Spot prices of iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62 dropped $3 to $147 a tonne on Tuesday, data from SteelHome consultancy showed.
“Due to transportation disruptions, most steel mills face raw material shortages … and there’s even possibility for production halt,” said Huatai Futures, noting that iron ore demand will be dampened.
Dalian coking coal prices DJMcv1 declined 1.6% to 2,940 yuan a tonne and coke futures DCJcv1 slipped 0.7% to 3,545 yuan per tonne.