China’s record steel prices underpin Asia’s benchmarks

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    Workers wearing face masks following the coronavirus disease (COVID-19) outbreak load steel products for export to a cargo ship at a port in Lianyungang, Jiangsu province, China. (Reuters Photo)

    Asia’s benchmark iron ore futures rose on Wednesday as record steel prices in China prompted investors to make tentative bets, despite production cuts in the country’s steelmaking hub that have clouded the demand outlook for the raw material.

    The most-traded September iron ore on China’s Dalian Commodity Exchange was up 2 percent at 996.50 yuan ($152.35) a ton, after swinging wildly during morning trade.

    Iron ore’s front-month May contract on the Singapore Exchange advanced 1 percent to $163.30 a ton.

    Spot iron ore from top supplier Australia for delivery to traded at $168.50 a ton on Tuesday, according to SteelHome consultancy.

    Chinese steel futures extended their rally in early trade to hit fresh peaks, boosted by strong domestic demand and concerns over output curbs in the world’s biggest producer and exporter of the construction and manufacturing material.

    In China’s top steelmaking city of Tangshan, the government has downgraded several mills in the wake of a clampdown on the industry’s heavy polluters, thus reducing their production capacities.

    Construction steel rebar on the Shanghai Futures Exchange jumped as much as 5,208 yuan a ton, the loftiest on record or since 2011 when rebar contracts began trading in Shanghai.

    It ended the morning trade down 0.3 percent at 5,156 yuan.

    “Chinese government restrictions continue to be supportive for prices,” ING commodity strategists said in a note. – Reuters