Chinese steel futures prices continued to slump to new lows on Tuesday ahead of the October national holiday. China has announced the second round of infrastructure public-private partnership (PPP) projects but infrastructure demand is insufficient to boost prices, Kallanish notes.

The January 2016 rebar contract on the Shanghai Futures Exchange closed down CNY 38/tonne at CNY 1,833/t ($287/t). The same contract for hot rolled coil closed down CNY 32/t at CNY 1,864/t.

China announced the second group of infrastructure projects chosen for PPP status this week. The list includes 206 projects nationwide which will have government funding but will also sell stakes to private investors.

Infrastructure remains one of the few bright spots for Chinese steel demand as Beijing struggles to meet its GDP growth targets. The actual demand generated is only a fraction of the demand lost to China’s slower real estate investment.

It has proved to be insufficient to counteract widespread expectations for a weak fourth quarter. Steel inventories ended their steady decline at the start of September and iron ore port stocks have also begun to rebound. Prices for steel and iron ore are expected to see another fall after the 1-7 October holiday. This is because mill margins are sharply down, exporters are struggling to maintain volumes and iron ore shipments are expected to continue to increase over the coming weeks.