March 21, 2018, 10:47 pm
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Shanghai rebar steady

Chinese steel futures steadied on Wednesday after a three-day decline that pulled prices down to one-week low amid expectations a pickup in construction activity will spur demand for the building material.

Construction activity in top steel consumer China is only resuming gradually after last month’s Lunar New Year holiday and steel stocks have risen to nearly one-year highs as traders look ahead to a pickup in demand.

The period after the Chinese New Year is usually the briskest for its construction sector, a big consumer of steel, following the winter lull.

The most-active rebar on the Shanghai Futures Exchange was nearly flat at 3,956 yuan ($625) a ton, but above Tuesday’s one-week trough of 3,919 yuan.

Construction projects are starting to resume in some districts in Beijing and there are expectations for strong steel demand in the provinces of Shandong and Anhui, said a Beijing-based trader.

Production restrictions on most Chinese cities covered by Beijing’s winter curbs will end on March 15. While some cities, including top steel-producing Tangshan, have declared they will continue with output limits after mid-March, most mills are looking forward to maximizing output.

China’s infrastructure push and environmental crackdown had helped increase margins at steel producers, which this year remain well above the five-year average. 

“Elevated steel margins encourage steel mills to boost output, increasing demand for iron ore and coking coal,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note. - Reuters
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