Chinese construction steel rebar futures rose to their highest in six months on Thursday, supported by environmental inspections across the country that helped to ease concerns about a glut and boosted market sentiment. Teams of inspectors have been sent to six regions, including the steelmaking hubs of Hebei and Jiangsu provinces, to review environmental violations that were found during the checks last year.
The latest inspections, which will last until the end of June, follow an earlier round of checks. "Steel prices will show an uptrend as environmental inspections exert pressure on output," said analysts from CITIC Futures. The most actively traded October rebar contract on the Shanghai Futures Exchange closed 1.5 percent higher to 3,807 yuan ($595.75) a tonne. Earlier in the session, it touched 3,869 yuan a tonne, a level last seen on December 5.
Daily crude steel output by major steel firms over May 10-20 continued to increase, reaching a fresh record at 1.97 million tonnes, data from China's Iron & Steel Association showed. Concerns of over-supply were also offset by declining inventory data. Stockpiles of rebar at Chinese traders fell to 5.32 million tonnes last week, down 5.9 percent from a week earlier, according to SteelHome data.
Steel stocks at mills also saw a clear decline. Total steel products inventory fell by 140,000 tonnes last week to 4.67 million tonnes as of June 1, the lowest level since early February, according to data from Mysteel consultancy. Spot steel prices rose 0.3 percent to 4,340.13 yuan a tonne on Wednesday, Mysteel data showed. Steelmaking raw materials also rose alongside steel prices. Iron ore futures on the Dalian Commodity Exchange shed early gains to end 0.4 percent lower at 469 yuan a tonne. Coke contract for September delivery rose 2.3 percent to 2,078 yuan, while coking coal futures gained 1.4 percent to 1,259 yuan a tonne.
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