Despite a huge global glut that led to defaults, closures, and enormous operating losses for producers, Chinese steel prices have been on a tear in 2016.
The rise has been buoyed by lower-than-normal inventory levels, seasonal restocking, producers bringing forward production ahead of government-enforced curtailment later this month, plus a surge in Chinese construction activity.
Front-month rebar futures on the Shanghai Futures Exchange have surged by over 70% since the beginning of 2016, leading to similar gains in iron ore and coking coal prices, key ingredients in the steel-making process.
It has been an amazing, and to many, largely unexpected development.
The scale of the price rally has led to another …
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