China steel rebar futures rise to a 14-week high on environmental inspections

Chinese construction steel rebar futures rose to their highest in more than three months on Thursday, supported by environmental inspections across the country that helped to ease concerns about a glut and boosted market sentiment.

Teams of inspectors have been sent to six regions, including the steelmaking hubs in North China’s Hebei Province and East China’s Jiangsu Province, to review environmental violations that were found during the checks last year.

The latest inspections, which will go on until the end of June, follow an earlier round of checks.

“Steel prices will show an uptrend as environmental inspections exert pressure on output,” said analysts from CITIC Futures.

The most actively traded October rebar contract on the Shanghai Futures Exchange gained 2.4 percent to 3,844 yuan ($600.91) a ton. It earlier touched 3,867 yuan a ton, a level last seen on March 1.

Daily crude steel output by major steel firms over the May 10-20 period continued to increase, reaching a fresh record at 1.97 million tons, data from China’s Iron & Steel Association showed.

Concerns of oversupply were also offset by declining inventory data. Stockpiles of rebar at Chinese traders fell to 5.32 million tons last week, down 5.9 percent from a week earlier, according to SteelHome data.

Steel stocks at mills also saw a clear decline. The total steel products inventory had fallen last week by 140,000 tons to 4.67 million tons as of June 1, the lowest level since early February, according to data from Mysteel consultancy.

Spot steel prices rose 0.3 percent to 4,340.13 yuan a ton on Wednesday, Mysteel data showed.

Steelmaking raw materials also rose alongside steel prices.

Iron ore futures on the Dalian Commodity Exchange increased by 1.1 percent to 476 yuan a ton.