China’s construction steel rebar prices recovered from a two-day slide on Tuesday, lifted by a price hike at big steel firms and on easing concerns over excess supplies in the market amid a declining utilisation rate at mills.
Shanghai benchmark rebar prices rose 1.9 percent to 3,856 yuan ($602.42) a tonne, its highest close since early December last year.
China’s top steelmaking companies, Baoshan Iron & Steel and Wuhan Iron and Steel Co, said on Tuesday that they will raise prices of some hot-rolled coil, beam and steel wire products for July delivery.
On Monday, Jiangsu Shagang Group, the country’s biggest private-owned steel mill by production capacity, said it will hike spot rebar and some wire products prices for June 11-20 delivery.
“As the low season for steel demand is approaching, price hikes at mainstream steel firms helped to stabilise market sentiment,” said analysts at Orient Futures in a note.
Summer is typically an off-peak season for the steel sector in China as high temperatures and heavy rain across the country curb construction activity.
De-stocking process for steel products at Chinese traders is slowing down. The inventory only fell by 390,000 tonnes last week as of June 8, the smallest weekly reduction since mid-March, and stood at 10.36 million tonnes, data from Mysteel consultancy showed.
Recent environmental inspections also helped support steel prices stay at a high level, with utilisation rates at steel blast furnaces across China falling for a third consecutive week last week to 71.41 percent, easing the pressure of oversupply in the market.
The most actively traded iron ore futures on the Dalian Commodity Exchange recouped from losses in early trade and closed 1 percent higher at 473.5 yuan a tonne despite mounting inventories at ports.
Stockpiles of iron ore at major Chinese ports fell marginally to 161.03 million tonnes – most of it Australian ore – last week from a record 161.98 million tonnes the previous week, data compiled by SteelHome data showed.
Spot iron ore for delivery to China’s Qingdao port .IO62-CNO=MB fell 0.7 percent to $66.75 a tonne on Monday, according to Metal Bulletin.
Dalian coke prices rose 4 percent to 2,141.5 yuan, while coking coal futures jumped 3 percent to 1,277.5 yuan, spurred by worries of tight supplies amid Beijing-led environmental checks.