It is reported that the dominant contract for RB 1010 lingers at CNY 4000 per tonne. Though it is not likely to see a complete reversal in domestic steel market, but price for construction steel products may rebound temporarily.

Price for construction steel products keeps falling owing to the weak demand and thereby spot price for iron ore dropped from USD 150 per tonne to USD 128 per tonne in two weeks. It is know that many steel mills' costs stay at CNY 3700 per tonne to USD 3800 per tonne. As there is limited room for further downslides in spot iron ore price, steel mills' costs are impossible to dive sharply. This will help stabilize domestic price for construction steel products.

The withdrawal of export tax rebates will not affect construction steel price as products affected by the withdrawal do not include construction steel products.

We believe that this round of curbs on real estate market aims at preventing property price from going up continuously but not to restrain investments in property. Chinese government is trying to increase supply of low-income housing, under which demand for construction steel products will be well secured.