China steel prices hit one-week highs on upbeat industrial output data

MANILA: Chinese steel futures jumped on Wednesday to their highest in a week, after data showed industrial output in the world’s biggest producer grew faster than expected in November, but a continued decline in steel production dragged down Dalian iron ore.

Construction steel rebar’s most-active May contract on the Shanghai Futures Exchange rose 1.7% to 4,468 yuan ($702) a tonne, its strongest since Dec. 8.

Hot rolled coil, which is steel used in car bodies and home appliances, climbed 2.4% to 4,650 yuan a tonne, also its loftiest since Dec. 8.

Factory output rose 3.8% in November from a year earlier, accelerating from a 3.5% increase in October, official data showed, supported by stronger energy production and a moderation in raw materials prices.

But crude steel output fell for the sixth consecutive month in November, slipping 3.2% from October, as production restrictions to combat pollution continued and construction demand remained stagnant.

The Dalian Commodity Exchange’s most-traded May contract for iron ore, a key steelmaking ingredient, fell as much as 2.6%.

On the Singapore Exchange, the most-active January contract was up 0.1% at $113 by 0338 GMT, after rising 1.6% earlier in the session. “The China policy landscape at the macro-level, including moves towards decarbonisation, remains a cap over the medium-term demand outlook for iron ore,” ING analysts said in their 2022 outlook for commodities.

They expect iron ore prices to weaken to $100 a tonne over 2022, “with the main upside risks still being potential supply chain disruptions in light of the Omicron variant”. Spot iron ore in China stood at $115.50 a tonne on Tuesday, the highest since Oct. 28, but just half of a record peak scaled in May, according to SteelHome consultancy data.