China’s iron ore futures trading on the Dalian Commodity Exchange for January crosses 715 yuan level per ton, portraying a three-day uptrend heading into Monday’s European session. On the same line, Construction used rebar rises around 1.0% to 5,562 yuan a ton whereas hot-rolled coils print 0.4% gains to 5,583 yuan per ton by the press time.
China’s recently aggressive push for climate controls measures by the industrial players has already favored the metal buyers. Adding to that were the later power cuts in the dragon nation.
Production curbs were used to tame the power usage by the industries. “Prices for steel rebar and hot-rolled coils on the Shanghai Futures Exchange also increased due to production curbs as major steel producing regions are restricting power usages,” said Reuters.
Bloomberg also quotes Nomura Holdings Ltd. and China International Capital Corp. (CICC) while citing woes over China’s economic growth due to the energy crisis. “The power supply shock will have a large impact on short-term production, especially in September, with industrial output growth in the month likely dropping to 4%-4.5%, they (CICC) wrote,” per the news. “The stringent measures to cut electricity use in economic powerhouses like Jiangsu, Zhejiang and Guangdong provinces will probably cause the purchasing managers index, scheduled for release later this week, to drop below 50, Nomura said in a report Monday,” adds Bloomberg.
While the power cuts are likely helping the industrial metals, Reuters said that the stainless steel futures on the Shanghai bourse plunged 5.1% to 20,250 yuan a ton, the reason could be linked to Evergrande fears.
Moving on, China’s economic transition and the Fed tapering concerns will be the key to forecast the near-term metal outlook.
