China’s return from the Spring Festival holiday has disappointed many in steel and raw materials markets. As previously noted, expectations for the return of demand had been overhyped, when there were so many factors which could delay any real rebound. A reassessment of the demand outlook for the year is underway in the market and prices are starting to come off a little.

There remains however significant potential for upside later in the year. Not only are aggressive measures in place to boost the economy by Q2, any sign of failure is likely to trigger more policy response as China has now committed itself to an economic rebound.

Signals over the last few weeks need to be picked apart in order to assess their impact on expectations, as the timing of the next rebound will be key to markets both inside and outside China.

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