Chinese rebar and hot rolled coil futures increased on Monday after the week-long Lunar New Year break, amid hopes of macro stimulus measures and rising spot offers, Kallanish notes.

On the Shanghai Futures Exchange, the May 2022 rebar contract closed CNY 18/tonne higher than 28 January, the last trading day before the holiday, at CNY 4,847/t ($762/t), and the same contract for HRC closed up CNY 35/t at CNY 4,980/t. Futures are riding conflicting signals for sentiment. China is aiming for an investment rebound to support the struggling economy.

Chinese provinces are releasing lists of major projects to advance investment and infrastructure development. As of 6 February, the total planned investment across eight provinces – Shandong, Beijing, Hebei, Jiangsu, Shanghai, Guangdong, Zhejiang, and Sichuan – has exceeded CNY 15.6 trillion ($2.45 trillion).

Despite the inevitable seasonal demand recovery after the festival, heavy snow in the Yangtze River Delta region has prevented demand from resuming immediately after the holiday.

A decline in real estate transactions has meanwhile also affected market confidence. China Index Academy data shows that the transacted area of new commercial residential buildings in key monitored cities dropped by 51% compared with last year's Spring Festival.

On Monday, The Ministry of Industry and Information Technology, the National Development and Reform Commission and the Ministry of Ecology and Environment jointly issued “Guidance on Promoting High-quality Development of The Steel Industry". Steel enterprises are encouraged to merge and reorganise across regions and ownerships.

In addition, in the fields of stainless steel, special steel, seamless steel pipe, and cast pipe, among others, China hopes to cultivate one or two leading steel enterprises. This once again shows China's insistence on increasing industry concentration and developing leading products or brands.