On Monday, September 18, Handan, a major steel producing city in Hebei Province, implemented measures aimed at reducing environmental pollution in autumn and winter, suspending sintering activity, pellet production and construction activity. Accordingly, some steel mills in Handan will shut down their sintering and blast furnace operations within the scope of measures to reduce emissions.
On September 19, rebar futures prices at the Shanghai Futures Exchange (SHFE) declined for the fifth consecutive trading day. The main rebar futures contracts at the SHFE, RB1801, has declined to RMB 3,740/mt ($575/mt), down by 1.24 percent compared to the previous day.
Furthermore, Beijing Municipal Commission of Housing and Urban-rural Development has issued a notice halting all road construction, water conservation projects and housing demolition during the winter season (November 15, 2017 to March 15, 2018), also aiming to curb pollution in winter.
In addition, the 19th National Congress of the Communist Party of China is scheduled to begin on October 18, and will necessitate strict environmental protection measures to ensure good air quality for the event.
Currently, demand for finished steel in China during the traditional peak season in September is slacker than expected, contributing to the downward movement of the futures market. Due to environmental protection measures, market participants anticipate that crude steel output in China will decrease, which will provide support for Chinese domestic and export steel prices, while demand for steel in China is expected to be negatively impacted. In this overall context, sentiment in the steel futures market in China is currently bearish.