Shanghai rebar prices increase amid tight supplies

Prices for Chinese Shanghai rebar steel edged up on Tuesday amid concerns further potential output cuts in the country’s top steelmaking city would hit supply.

The most-active construction steel futures had risen 0.6 percent to 4,111 yuan ($603.22) a ton.

Prices have been buoyed by market expectations that the city of Tangshan, China’s No.1 steelmaking hub, could introduce new output cuts in September to curb harmful emissions from heavy industry.

However, no official notice has been delivered to industrial plants, with the Tangshan city government declining to comment to Reuters on the matter.

“It is getting harder to guess what step the government will take next. We think prices will remain volatile before new driving forces appear on either the supply- or demand-side,” analysts from Huatai Futures said in a note.

Meanwhile, Jiangsu Shagang Group, the biggest privately owned steel mill in China, has raised its rebar and steel wire prices for September 1-10 delivery by 80 yuan per ton.

According to the Hebei Metallurgical Industry Association, the steel purchasing managers’ index dipped to 48.8 in August, its third straight month below 50, indicating contraction on a monthly basis in the sector amid falling output and decreasing exports.

“Due to escalated environmental curbs, steel production continued to be restrained... We expect output curbs may be strengthened in steel sectors while demand in downstream sectors will generally be positive,” the association said in a statement.