It is reported that steel price kept declining on January 25th in China under the anticipation of interest increase. However, industry insiders unveiled the price is likely to jump after Spring Festival citing the pushers of rising cost and real estate and so on.

Mr Cao Xin analyst of GF Securities considered the short position was mainly promoted by the credit squeeze and interest increase rumor. He said that "Steelmakers are hard to profit in terms of the present steel price. We believe there is limited decreasing room now and as a matter of fact, this may be the best time to buy in."

Securities Times reported that the bullish price of raw material has been firstly adjusted due to the weak steel price. According to the statistics, steelmakers' wait-and-see attitude and small price drop by Indian miners led to a price decrease of 2.99% on Indian iron ore last week. As a result, Chinese domestic iron ore price fell by 1.52%WoW and the social inventory witnessed an increase of 3.19% WoW.

Mr Hu Hao analyst of Everbright Securities said nevertheless, the rumor of interest increase just affected steel market sentiment, albeit, the general situation is better than expected, without any dramatic fall on steel price. Actually, deposit reserve requirement ratio increase does not mean credit squeeze.

He said that "Steel inventory is likely to keep jumping in the future as for seasonal factors, but will with relatively lower growth rate compared with previous time."
Mr Liu Zhuoping analyst from Dongguan Securities analyzed that steel price rise may accelerate during end February to early March citing the rising cost, credit, investment in real estate and previous experience.