The price of steel used in construction and manufacturing rose on Wednesday amid supply concerns after one of China’s most important steelmaking cities implemented a temporary lockdown due to surging coronavirus cases.
The Tangshan government implemented a temporary lockdown on Tuesday to avoid further cases of Covid-19 as infections surged, the local government said in a statement.
The most-traded steel rebar on the Shanghai Futures Exchange, for May delivery, jumped 1% to 4,983 yuan ($154.21) a tonne when market closed. Hot-rolled coils, used in cars and home appliances, inched up 0.4% to 5,189 yuan per tonne.
“Although consumption for steel products are relatively sluggish, but production is also falling,” analysts with Huatai Futures wrote in a note.
Raw materials inventories are still tight, which could further sustain steel prices, it added.
Stainless steel prices on the Shanghai bourse ended 2.8% higher to 20,415 yuan a tonne, after raw material nickel showed signs of normalising. They were up as much as 3.7% earlier during the session.
Steelmaking ingredients on the Dalian Commodity Exchange were mixed after falling more than 3% during night session, with benchmark iron ore edging up 0.4% to 823 yuan a tonne.
Spot prices of iron ore with 62% iron content for delivery to China dropped $3 to $147 a tonne on Tuesday, data from SteelHome consultancy showed.
“Due to transport disruptions, most steel mills face raw material shortages … and there’s even possibility for production halt,” said Huatai Futures, noting that iron ore demand will be dampened.
Dalian coking coal prices declined 1.6% to 2,940 yuan a tonne and coke futures slipped 0.7% to 3,545 yuan per tonne.
- Reuters, with additional editing by George Russell