LAUNCESTON, Australia, Dec 17 (Reuters) – China’s steel and iron ore prices have started to climb in response to winter production curbs, but recent gains are far from suggestive of a rosy outlook for the sector.
The catalyst for the rebound in prices would appear to be signs that the authorities in steel-making centres are starting to clamp down harder on air pollution, after earlier indications that this winter’s output curbs wouldn’t be as severe as those for the previous cold season.
Benchmark steel rebar in Shanghai closed on Dec. 14 at 3,427 yuan ($497) a tonne, up 3.7 percent from the close of Dec. 11, and 7.4 percent higher than a recent closing low of 3,192 yuan on Nov. 26.
Iron ore prices have come along for the ride, with 62-percent iron ore grade, as assessed by Argus Media MT-IO-QIN62=ARG, jumping 8.5 percent from a recent low on Nov. 27 to end at $70.05 a tonne on Dec. 14.
Steel rebar is still almost 14 percent below its 2018 peak, touched in late August, but the recent price action is suggestive of the view of those who think that output curbs will limit supply and that demand will remain relatively robust.