The Chinese economy seems all set for another round of austerity with People’s Bank of China, announcing issuance CNY 86 billion of 3 year bills in the regular open market, indicative of curtailed monthly loans.
In the backdrop of sagging macroeconomic indicators slowdown in Chinese growth seemed evident. Turbulent steel futures markets and speculative buying contributed towards a hazy forward visibility in the run up to construction season.
July’s 13.4% YoY growth in industrial output was the lowest in 11 months.
GDP rose 10.3% in the 2nd quarter although slumping from 11.9% in the Q1.
Overall market activity picked up though it had primarily speculative tenor as end user remained muted.
The market seems to be gearing for a September recovery, though this is not expected to be greater than the seasonal surge seen at the same time last year as government regulating policy played the dampener.
The market levels are now said to be highly influenced by futures and screen trading making the movements fickle and volatile. A small pessimistic economic news disproportionately affects the futures price and consequently the present levels.
As per report, China's banking regulator has ordered lenders to test the impact of a fall in house prices of up to 50% in key cities where prices have risen sharply. As a result new housing starts were down 38%, as previously reported.
The move, which runs counter to speculation in some quarters that China might ease some curbs before long to boost the slowing economy, is a fresh demonstration that Beijing is intent on fighting property speculation and deflating record high prices.
Auto Sale growth in China slowed to 17.18% in July from 124% in January showing gradual erosion of demand.
With inventories of flat steel products remain at high levels, with much speculative buying taking place in the run up to autumn.
But BaoSteel announcement of rolling over September EXW prices for HR, widely regarded as a bellwether for the industry, is pointing to inherent weakness in Chinese steel market.
The coming days will be crucial for the global steel economy as apart from China, but as Europe and Middle East market re-opens after the recess bottled demand is likely to be unleashed. Cumulatively September promises to be agog with pyrotechnics in all the vital regions likely to set the coordinates for Q4 and Q1 2011.
The Chinese Long Product Price Index CLPPI increased by 9 points in last week whereas the Chinese Flat Products Index CFPPI also continued inclining by 14 points. The overall price index CHISPI raised by 12 points.