Chinese steel futures jumped in the morning of December 22, extending gains from earlier this week, as prices of key raw materials surged.

 

The most-active rebar contract on the Shanghai Futures Exchange rose 1.57% to 4,016 yuan/t ($562/t) by the midday break. Hot-rolled coil futures climbed 1.70% to 4,139 yuan/t.

 

Iron ore futures on the Dalian Commodity Exchange gained 3.06% to 977.5 yuan/t. Coking coal and coke prices also rallied strongly, with futures up 3.76% and 3.98%, respectively.

 

Spot prices for steel products in major cities like Shanghai, Hangzhou, Nanjing and Wuhan rose 10-30 yuan/t, market sources noted. In Shanghai, mainstream offer prices for rebar in the spot market were around 3,930-3,970 yuan/t, ex-stock with VAT, up 10 yuan/t from a day earlier.

 

Utilization rates at 247 blast furnaces fell slightly to 84.75% this week ended in December 22, while rates at 87 electric arc furnaces eased 0.14 points to 67.01%, market data showed. Port inventories of imported iron ore rose 3.02 million tonnes to 118.87 million tonnes.

 

The decline came after several steel-producing cities, such as Handan in Hebei province, upgraded air-pollution response to the highest level, weighing on steel production.

 

Steel sales improved strikingly in the second half of this week, but analysts said seasonal weakness could cap further demand gains.

 

Still, rising raw material costs are seen supporting prices in the near term. But traders remained wary of speculative buying inflating some grades, given demand uncertainties in the off-season.

 

Meanwhile, the Ministry of Housing and Urban Rural Development held a meeting during December 21-22, deploying missions for 2024 to strike a balance between supply and demand in the property sector.