- ‘Production-curbs issue should not be taken lightly,’ ANZ says
- Rebar goes limit-up in Shanghai as iron ore futures advance
Steel and iron ore are China’s hottest commodities right now, and it’s policy makers that are driving the gains. Steel futures went limit-up in Shanghai and iron jumped as investors bet that looming output curbs in the top producer’s main hub will further tighten a squeeze on supply.
Reinforcement bar surged as much as 6.3 percent on the Shanghai Futures Exchange, the maximum allowed, before closing at a four-year-high. Iron ore rallied as much as 7.3 percent, with the SGX AsiaClear contract in Singapore wiping out this year’s losses. Steelmakers and miners’ shares also rose.
“Steelmakers are facing government-ordered capacity curbs at a time when orders are full and inventories are relatively low,” Zhao Xiaobo, an analyst at Sinosteel Futures Co., said in a note Monday. Last week, nationwide holdings of rebar, a key product used in construction, shrank 1.9 percent to near a seven-month low, according to Shanghai Steelhome E-Commerce Co.
Steel has been supercharged — boosting mills’ profit margins and stoking demand for iron — as moves on three fronts combine to support prices in the country that accounts for half of global production. First, a crackdown on illegal mills earlier this year shuttered some supply, strengthening the position of remaining producers. Second, demand has been underpinned by significant state-backed stimulus. And third, investors are eyeing signals…