Ahead of the Victory Day parade that will take place in early September in Beijing, the government ordered a cease on construction work from 20th August to ensure clear skies, shared Paul Bartholomew, managing editor of steel & steel raw materials, Platts. This move has sparked a bout of steel restocking from end-users, and larger mills have also tried to stop spot prices from falling by raising their floor prices, he added.

Due to these, the CSSI for August rose 28.6 points from July to 55.1 points, a first reading over 50 points since May this year. New domestic orders scored 56.9 points and new export orders rose to 34.5 points compared to July’s 26.4 points and 28.3 points respectively. The most notable increase in index scores was for the prices of long steel products, which rose 53.4 points to 70.0 in August.

“Whether any recovery (of steel prices and orders) is sustainable remains to be seen as demand in China’s property construction sector is constrained by an oversupply of empty apartments in the country,” said Mr Bartholomew.

In contrast to these improvements, the index for steel production has dropped to 35.0 points from the 50.0 points recorded in July. According to Mr Bartholomew, a lower steel production for August is expected due to weak market conditions that have forced some mills to trim output, and rumours that the government will ask mills to cease production ahead of the parade as well.