Chinese steel futures held steady on Tuesday, but prices for steelmaking raw material iron ore dropped as steel mills in the world's top producer cut output.
China's government has vowed to clear its air, ordering 28 cities to curb industrial production, prompting a shortage of supplies in some steel products including rebar for construction use.
However, steel demand is expected to decline seasonally in late December as cold weather hits construction, offsetting upward momentum in prices driven by the supply shortages.
"Rebar is positive as the output curb has led to falling inventories at both steel mills and commercial warehouses. The market is tightly balanced," said Wang Yilin, an analyst with Sinosteel Futures in Beijing.
The most active rebar on the Shanghai Futures Exchange was trading almost flat at 3 922 yuan ($592.22) a tonne by the midday break.
China's top steelmaking province of Hebei issued its second-highest air pollution alert on Tuesday, with 10 industrial cities carrying out emergency anti-pollution measures including further cuts at steel mills and coke plants.
Iron ore was the weakest of steelmaking raw materials traded on the Dalian Commodity Exchange, with the May contract dropping 0.7% to 504.5 yuan a tonne.
Coking coal edged up 0.8% to 1,288.5 yuan a tonne and coke rose 1.1% to 2 117 yuan a tonne.
Iron ore for delivery to China's Qingdao port slipped 0.8% to $68.82 a tonne, according to Metal Bulletin.
Edited by: Reuters
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