China’s domestic rebar prices increased sharply on Thursday September 9 after the news that Jiangsu will restrict steel production in the remaining months of this year.

Domestic

Eastern China (Shanghai): 5,410-5,440 yuan ($837-842) per tonne, up by 90-110 yuan per tonne.

Jiangsu province will be conducting decarbonization compliance inspections of local enterprises with high energy consumption and emissions, according to a notice released by the provincial Department of Industry and Information Technology (DIIT).

The notice said local governments must immediately rectify consumption excesses in projects with an annual energy consumption increase of up to 5,000 tonnes of standard coal.

Those with an annual energy consumption increase of more than 5,000 tonnes of standard coal will be reported to provincial DIIT. DIIT will then review the technical transformation and work with local governments to rectify the projects’ consumption.

Steel mills are on the check list. They are required to cut their energy consumption, which will lead to lower production rates, an industry analyst said.

The news pushed up steel futures and spot prices sharply today and also stimulated buying interest, because Jiangsu is the second biggest steel production hub in China.

Crude steel production in Jiangsu was 83.46 million tonnes in the first six months of this year, up by 22.4% year on year, according to National Bureau of Statistics.

Market chatter

“Jiangsu is the biggest rebar producer in Eastern China, and the production cut will support a continued upward price trend,” a trader in Shanghai said.

Billet

As of 3pm in Shanghai, billet was being traded at 5,140 yuan per tonne including value-added tax in Tangshan, up by 20 yuan per tonne from a day earlier.

Shanghai Futures Exchange

The most-traded January rebar futures contract closed at 5,682 yuan per tonne on Thursday, up by 230 yuan per tonne from a day earlier.

(MetalBulletin, 10 Sep, 2021)