Warming up for an Auspicious Entry Into 2013 Has Seen Sudden Turn of Events

Putting behind the gloom of 2012 Chinese economy and industry seems to be warming up for an auspicious entry into 2013 at long last. Q4 has seen sudden turn of events kindling hopes of revival in Chinese steel industry backed by impressive economic indicators and unfolding of mega infrastructure stimulus package of USD 157 billion. 

A fresh mind at the helm of politburo to guide implementation of key construction and infrastructure projects financial markets portends to liberate giving the elusive insinuations to the property market with credit availability. 

HSBC PMI nos. have been ascending m-o-m touching it highest level in the last 18 months at 51.5.Even though 2012 is expected to end with 7.7 % GDP growth lowest since 1999 economy seems poised for revival at 8.6% with momentum likely to pick up in the coming months when infrastructure construction runs into full speed and property market conditions stabilize.

Beijing's reiteration of keeping pro-growth policy in place into the coming year has undoubtedly set the tone despite the ongoing external headwinds.

The improving economic picture seems primarily linked to domestic demand, as China's export sector continues to grapple with a slowdown in its biggest markets. 

While avoidance outlandish splurge in post 2008 era of CNY 400 trillion stimulus packages culminating in bad debts and rampant speculation leading to inflation state is in a combative mood to boost growth included injecting liquidity into the financial system through money market operations and accelerating approval of infrastructure projects.

Land prices have ticked up in many regions and developers are once again openly marketing luxury second homes, even in the capital. China's property sector directly supports over 40 industries.

Steel market has reacted predictably with mills not only hiking production but the prices having appreciated by nearly 10% since October and iron ore price 18%. 

As the steel and the iron ore inventory touching lowest points in the last 1 year and Lunar holidays just a month away time is ripe for inventory build up in the supply chain and mills backyard.

China would play second fiddle in the international arena with domestic levels being enticing export availability would be low. However this will certainly give some fillip to export offers from Japanese and Korean mills filling the gap.