China: Steel futures hitting high
Top 5 things to pay attention to this week:
- ECB policy meeting
- U.S. ISM services PMI
- UK PMIs
- China trade figures
- Bank of Canada rate decision
China steel future prices:
In the beginning, China’s steel future prices jumped to their high this morning. It is the highest in 4 and a half years. The fire might lead to the new round of inspections…
One of the most active rebar futures on SHFE hit $639.87 (4,194yuan) a tonne. This is the highest level since the winter of 2013. The news about the fire at Bengang Steel Plates plant have influenced the chinese market really serious.
“Spot rebar prices picked up 0.9 percent to 4,310.42 yuan a tonne on Friday, showed data from Mysteel website. “ (Reuters)
Further fire will affect 4,500-5,000 tonnes of daily output of steel. Apart from influence that it will have on Benang itself, it also leaves a mark on Benxi Iron and Steel Group Co.
Later the analysts and investors think that the incident could inspire stricter safety inspections at mills. Leading to production halts and intensifying a shortage of supply.
“Under the pressure of strict environmental policy, expectation of tight supply has offset concerns over weak demand downstream which is also likely to be affected by inspections.” (Orient Analyst)
Observing the back up for this rebar price rise was also supported by strong manufacturing activity data released on Friday.
“The Caixin/Markit Manufacturing Purchasing Managers’ Index picking up to 6-month high.” (Investing.com)
Safety checks
The potential impact of environmental and safety checks is dazzling a number of industries in the world’s second-biggest economy.
During the last week, China’s State Administration of Work Safety said it is going to carry out safety inspection in various industries.
Starting with coal, chemicals, moving to transportation, and finishing with construction inspections.
MEP announced the new round of inspections Starting in September. And will last till the end of March. The politically crucial Air quality targets.
Finishing, the steel production in smog-prone Beijing-Tianjin-Hebei region will be limited during winter. Military blocks in some cities, including top steel producer Tangshan. They have been ordered to cut capacity by as much as 50 percent in polluted days.
Meanwhile, the most-traded January iron ore contract on the Dalian Commodity Exchange rose nearly 1 percent to 583 yuan a tonne by 0307 GMT.
In conclusion, safety checks are to influence the market and shake all the participants.