Shanghai Steel Hits Six-week High On Upbeat 2018 Outlook

MANILA, Nov 27 (Reuters) - Shanghai steel futures climbed to a six-week high on Monday, supported by expectations that Chinese demand will remain firm into the new year, lifting prices of steelmaking ingredients - iron ore and coking coal - to similar multi-week peaks.

Prices in the world’s largest steel consuming country will continue to remain strong in 2018 with supply and production becoming more balanced, an official from the China Iron and Steel Association (CISA) said last week.

China’s tighter environmental rules will curb steel output in 2018, and should help extend this year’s strength in steel prices that allowed loss-making producers to make money, Gu Jianguo, deputy head of CISA, told an industry forum on Friday.

The most-active rebar for May delivery on the Shanghai Futures Exchange was up 2 percent at 3,870 yuan ($587) a tonne, as of 0237 GMT. Earlier in the session, the construction steel product hit 3,880 yuan, its highest since Oct. 17.

Iron ore on the Dalian Commodity Exchange climbed as far as 516.50 yuan per tonne, its strongest level since Sept. 20, and was last up 0.8 percent at 512 yuan.

Iron ore traders continue to bet on a rebound in demand after the winter production curbs on steel mills around Beijing, ANZ analysts said in a note.

“With steel mills keen to meet demand from operations not affected by the closures, demand for higher quality iron ore is a way to boost output without restarting capacity,” ANZ analysts said in a note.

Steel production in northern China remains constrained by limits imposed by Beijing as part of its fight against smog, restrictions that are expected to be in place through March.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB rose 0.4 percent to $67.94 a tonne, its loftiest since Sept. 20, according to Metal Bulletin. The spot benchmark gained 8.5 percent last week, its biggest such increase since early July.

Other steelmaking raw materials also advanced on Monday. Dalian coking coal touched 1,344 yuan a tonne, its highest in more than 10 weeks, and coke hit a nine-week peak of 2,045.50 yuan.