Chinese steel futures snapped a five-day winning streak on Thursday amid indications measures by a key producing region to cut output had not been imposed strictly, although Beijing’s push to curb overcapacity put a floor under prices.
The government of Tangshan city in the top steel-producing province of Hebei ordered sintering plants to cut output between July 12-31 as it aims to improve air quality, according to a notice seen by Reuters. Expectations this would lead to supply interruptions drove up steel prices to a near 11-week top on Wednesday.
“The measures in Tangshan haven’t been enforced strictly as previously expected, which has cooled down the market a bit,” said Xie Shuangqing, an analyst with Huaan Futures in Hefei.
But given that cutting overcapacity still remains a focus for the government, investors are continuing to bet on a longer-term rebound in prices, the analyst added.
The October benchmark rebar contract on the Shanghai Futures Exchange closed 1 percent lower at 2,524 yuan ($377.40) a tonne. It hit a top of 2,589 yuan in the previous session, the highest since April 29.
For steelmaking raw materials coking coal and coke futures, prices on the Dalian Commodity Exchange fell 3.2 percent and 0.7 percent, respectively.
The benchmark September iron ore futures on the Dalian Commodity Exchange rose 1.2 percent to 464.5 yuan a tonne by close.
Iron ore for immediate delivery to China’s Tianjin port was at $58.7 a tonne on Wednesday, down 10 cents from a 10-week high hit on Tuesday, according to The Steel Index.