Curtains Were Drawn on The Steel Specter in Chinese Steel Market on Monday

Curtains were drawn on the steel specter in Chinese steel market on Monday with sparkling recovery in both long and flat market. After nearly month long rummaging price improved by 1% bringing to passé the built of optimism in Chinese industry off late.

After the political change of guard in early November feel good factor has been building up of hope and optimism of economic revival. Appositely key economic indicators pouring in over the last fortnight have struck the right note.

Economic growth is expected to end at 7.7% this year with 2013 touted to be around 8-9% on improved spending on infrastructure and retail demand of consumer durables.

Inflation has touched 2.1% obviating fear of price escalation in socialist society. Even though it might not encourage PBOC to go for cut in lending rate immediately but lowering of the CRR will continue with reduction in lending rates after lunar holiday.

Most remarkable news has been an astounding HSBC flash manufacturing index for China rising to 50.9, a 14 month high and the fifth straight monthly gain, driven by domestic demand. It signifies significant improvement in industrial production which remains ascendant. Manufacturing sectors like auto and home appliance post acceptable performance since Sep, driving traders to replenish stocks of steel products, China produced 1.76mln vehicles in Nov, a y-o-y increase of 3.92% and a m-o-m jump of 10.99%. In the same month, China' auto sales rose 8.16% y-o-y and 11.52% m-o-m to 1.79mln units.

Horizon finally seems resplendent in Chinese steel industry and portends to remain so till Lunar Holidays as the market apart from improved demand also hinges on built up of positive sentiments unlikely to desert soon.