Rolled steel prices rise in China amid new production restrictions

Steel product and coking coal prices jumped on Friday as key steel city Handan in northern China announced new restrictions on air pollution, while investors have already closed their short positions to close the month and the first quarter.

The most active rebar contract on the Shanghai Futures Exchange closed 4.4 percent higher at 3,391 yuan ($ 540.62) a tonne, which rose late in the session after Hebei Province announced a 25 percent cut in production in Handan from April 1st to November 15th this year.

Despite the big jump on the last trading day of the quarter, the largest daily gain in rebar prices since August 7, 2017, this steel product continued to record a 12.4% decline in the first quarter, the first quarterly decline since the fourth quarter of 2015.

Meanwhile, the most traded coking coal contract on the Dalian Commodity Exchange ended up 5.8 percent at 1,281.50 yuan a tonne, the largest one-day gain since November 4, 2016, while coke closed 3.4 percent higher and amounted to 1,822 yuan per ton.

Coking coal is down 11.2% this month, its largest monthly loss since September and its first quarterly drop since last year's second quarter. Analysts say the market was "oversold and bounced," said Zhao Xiaobo, an analyst at Sinosteel Futures in Beijing.

High tariffs imposed on rolled steel imports by Washington and a growing trade dispute with the United States weakened the prospects for steel production, as the rise in inventories and recovery in demand after a week of spring festival did not reach a new level. Production also increased after China's pollution control expired on March 15.