Shanghai rebar steel futures climbed almost 2% on August 3 to near a 5-and-a-half-year high amid China's plans to impose industrial production curbs during winter for the second year in a row.
Coke prices jumped more than 5% on the planned restrictions, hitting their strongest level since mid-September and marking the best week since January 2017. Iron ore and coking coal also rose.
In the latest plan to be implemented from October 1 to March 31, 2019, steel mills in six key northern cities - Tianjin, Shijiazhuang, Tangshan, Handan, Xingtai and Anyang - will be asked to cut 50% of their capacity during the heating season.
The steps will be largely similar to those imposed during the most recent winter period - between November 15, 2017 and March 15, 2018 - that asked steel mills, coke producers, smelters and other industrial plants to cut output to limit pollution.
The most active October rebar on the Shanghai Futures Exchange closed up 1.6% at 4,187 yuan/t ($609/t), after peaking at 4,199 yuan/t earlier in the day, near August 1's 5-and-a-half-year high of 4,243 yuan/t.
The construction steel product gained almost 3% last week, the most in three weeks.
"Assuming key focus areas cut 50% of capacity while the rest of the areas ... cut 30%, we estimate the steel production impact to be at 78 million tons during the winter period," Morgan Stanley analysts wrote in a note.
Prices of coke, the processed form of coking coal, also jumped. The most-traded September coke on the Dalian Commodity Exchange climbed as far as 2,429.50 yuan/t, the highest since September 14.
The contract ended 5.5% higher at 2,428 yuan/t, gaining 9.5% for the week, its biggest such increase since January 2017.
Iron ore futures rose 2.3% to 484.50 yuan/t while coking coal climbed 1.6% to 1,202.50 yuan/t.
Sources:sxcoal
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