MANILA: Dalian coke futures rose for a third straight session on Tuesday to hit an 11-week peak, while coking coal scaled a new contract high, underpinned by concerns over supply of the steelmaking inputs in top steel producer China.
The most-traded coke for September delivery on China’s Dalian Commodity Exchange rose as much as 2.8% to 2,910 yuan ($449) a tonne, its strongest level since May 12, before trimming gains to trade 1% higher by the end of morning trade.
Coking coal advanced by up to 2.7% to 2,190.50 yuan a tonne.
Domestic supply of coke, which is used as a reducing agent in melting key steelmaking ingredient iron ore in blast furnaces, has tightened as producers have also been affected by stricter regulations on carbon emissions.
“Both supply and demand have declined... but the tight balance is still maintained,” Sinosteel Futures analysts said in a note, adding costlier coking coal also provided support to coke prices.
Rising costs of steelmaking inputs could make it difficult for China to rein in high prices of steel products, which have already eroded profits at its industrial sector.
Profit growth at China’s industrial firms slowed for the fourth straight month in June, as high raw material prices weighed on factories’ margins, pointing to some weakness in the recovery of the world’s second-biggest economy.
Shanghai steel futures hovered near 10-week peaks earlier in the session before wiping out gains.
Construction steel rebar on the Shanghai Futures Exchange was down 0.4% by noon break, while hot-rolled coil slipped 0.3%. Stainless steel dropped 1% after scaling a record high.
Dalian iron ore’s most-active September contract also surrendered earlier gains, down 0.8% at 1,132 yuan a tonne.
Iron ore’s most-traded September contract on the Singapore Exchange edged up 0.3% to $195.40 a tonne.