Reuters quoted the China Iron & Steel Association as saying that Chinese steel demand will be affected by a slew of measures taken by the government to tighten liquidity and curb inflation.
CISA also said that restrictions on steel production have gradually loosened after local governments met year end energy savings targets by ordering a big number of steel mills to shut down partially or entirely since September.
CISA said "Steel prices will continue to remain volatile within a narrow range on weak demand in the winter season while long steel product prices will continue rising due to relatively rapid growth in demand compared with flat products."
Adding to weaker demand and resumption in production, CISA warned that China steel exports will remain under pressure from higher inflation, trade disputes as well as an appreciating yuan currency.
By the end of November, total non steelmakers' inventories of five major steel products stood at 13.06 million tonnes in 26 major domestic cities down by 10.5% from October and the fifth MoM fall over the last six months.