Posted on 16 Dec 2021
Chinese steel futures hit a one-week high on Wednesday, after data showed industrial output in the world’s biggest producer grew faster than expected in November, but a continued decline in steel production dragged down Dalian iron ore.
Construction steel rebar’s most-active May contract on the Shanghai Futures Exchange SRBcv1 ended daytime trading 1.1% higher at 4,441 yuan ($697.82) a tonne, after touching 4,468 yuan earlier in the session, its strongest since Dec. 8.
Hot rolled coil SHHCcv1, which is steel used in car bodies and home appliances, climbed 1.5% to 4,609 yuan a tonne.
Factory output rose 3.8% in November from a year earlier, accelerating from a 3.5% increase in October, official data showed, supported by stronger energy production and a moderation in raw materials prices.
But crude steel output fell for the sixth consecutive month in November, plunging 22% from a year earlier, as production restrictions to combat pollution continued and construction demand remained stagnant.
The Dalian Commodity Exchange’s most-traded May contract DCIOcv1 for iron ore, a key steelmaking ingredient, fell 2% to 649 yuan a tonne.
On the Singapore Exchange, the most-active January contract SZZFF2 was virtually flat at $112.90 a tonne by 0706 GMT, after rising 1.6% earlier in the day.
“The China policy landscape at the macro-level, including moves towards decarbonisation, remains a cap over the medium-term demand outlook for iron ore,” ING analysts said in their 2022 outlook for commodities.
They expect iron ore prices to weaken to $100 a tonne over 2022, “with the main upside risks still being potential supply chain disruptions in light of the Omicron variant”.
Spot iron ore in China stood at $115.50 a tonne on Tuesday, the highest since Oct. 28, but just half of a record peak scaled in May, according to SteelHome consultancy data.
Source:Reuters
