Shanghai rebar prices hit 6-year high on output curbs

Shanghai rebar steel futures jumped to their strongest level since 2012 on Monday, as output curbs in China aimed at battling pollution kept supply tight in the world’s top producer.

Steel’s climb came as most other commodities retreated, with investors shunning risky assets in favor of safe havens such as the dollar, on worries that a renewed rout in the Turkish lira could spread to other currencies.

China plans to limit output by 30-50 percent at industrial plants, including steel mills, for a second straight winter in its smog-prone Beijing-Tianjin-Hebei region.

The winter cuts will come on top of production restrictions that many Chinese cities have imposed this year to comply with the country’s anti-pollution campaign.

The most-actively traded rebar on the Shanghai Futures Exchange was up 1.8 percent at 4,310 yuan ($627) a ton, after earlier peaking at 4,318 yuan, the highest since April 2012.

Stockpiles of the construction steel product stood at 4.14 million tons last week, not far above the prior week’s 4.09 million tons, which was the lowest since January, according to data tracked by SteelHome consultancy.

The price of rebar futures has risen nearly 20 percent this year against a 6.6 percent decline in iron ore.

The most-traded iron ore on the Dalian Commodity Exchange gained 0.2 percent to 513 yuan a ton, while coking coal slipped 1 percent to 1,249.50 yuan.

Demand for such steelmaking raw materials could be dented as a result of production curbs in China, traders say. China said on Friday that it will work to improve the monitoring of emissions from heavy industries like steel, coal-fired power generation, coke and chemicals in key regions over the coming three years to tackle smog.