Issue 43, 2024 - This week's editorial: Market braces for next China meeting, scrap firmly down

Hold on to your hats, folks! Another Chinese government meeting is coming up fast and raising market expectations yet again for stimulus announcement. The National People's Congress Standing Committee (NPCSC) was rescheduled till 4-8 November, some think, to give authorities time to finalise new economic measures. Iron ore and coking coal prices duly rebounded on Friday after falling throughout the week. But we’ve been here before, haven’t we? Turkish scrap prices meanwhile slumped further following fresh deals from the EU and US, while participants at the much-anticipated Euroblech flat steel trade show agreed EU coil prices are increasing, but probably at snail’s pace.

So fickle is Chinese market sentiment these days that iron ore prices had been gradually declining until Friday as rumours circulated that China may not introduce additional fiscal stimulus measures for the remainder of the year. Following the announcement of the November meeting, markets are now waiting for confirmation of a new round of central government bond issuance, which could be for this year or next, or for the longer term. This remains unclear. 

From January to September, meanwhile, Chinese local government special bond issuance stood at around CNY 3.6 trillion ($505.2 billion), up by CNY 129.3 billion year-on-year. However, whether this growth will substantially support infrastructure and lift steel demand remains to be seen.

Chinese hot rolled coil prices also rose on Friday after four days of fluctuations, with apparent consumption stabilising amid a further drop in inventories. However, export prices did not rebound, registering a $10/tonne on-week drop to $500-510/t fob. The reluctance of Vietnamese buyers to conclude purchases remained a key issue.

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