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Lockdown in China’s Tangshan Prompts Jump in Steel Prices

The Tangshan government implemented a temporary lockdown on Tuesday to avoid further cases of Covid-19 as infections surged, the local government said


A worker walks past a pile of steel pipe products at the yard of Youfa steel pipe plant in Tangshan. Photo: Reuters.

 

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

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.