Nearly 16-week high steel market cut capacity high hopes
Shanghai steel futures market price on Wednesday (August 17) in its April high, due to China Galvalume Steel Sheet
industry and strive to reduce excess capacity, or to suppress the market supply, support from higher prices.
China's State Council held an executive meeting on Tuesday, the deployment of the iron and steel industry coal to resolve excess capacity to carry out special supervision to ensure the completion of the established objectives and tasks, while at the same time continued weak foreign trade of the State Council has pledged to intensify efforts to implement policies to promote import and export stabilized recovery.
Argonaut Securities in Hong Kong, an analyst Helen Lau said, "I believe the move will certainly accelerate the industry consolidation of the coal and steel industries as well as capacity reductions." China's commitment to reduce 45 million tons of production capacity this year, but completed only 47%.
Shanghai Futures Exchange rebar most actively traded futures contract fell 0.3 percent in early trading on Wednesday, 2,622 yuan per tonne. The contract on Tuesday hit 2687 yuan per ton since April 25 high.
Traders said that as more stringent environmental protection regulations, Chinese city of Tangshan steel production limited production again, also supported prices.
In addition, the recent rise in steel prices also spurred rising raw material prices for iron ore, the current spot iron ore prices have returned to above $ 60 a tonne.
According to agency data, China's iron ore Wednesday Tianjin Port delivery climbed 3 percent to $ 61.80 per ton for the highest since May 3. Dalian Commodity Exchange, January iron ore futures on Wednesday rose 1.4 percent to 437 yuan per ton.
Atul Lele, Chief Investment Officer of Deltec International Group said, "positive short-term outlook for iron ore, China stimulus to promote infrastructure and housing construction activities may boost steel production growth in iron ore demand and prices."
However, Lele added, "In the medium term, the steel consumption peaked, the current actual higher risk, capital outflows continue to make financial conditions tighten."