On Tuesday, the first trading day after the week-long National Day holiday, Chinese rebar and hot rolled coil futures fell through the day from a high opening level. Although the average price of intraday trading was still higher than the prior trading day, both futures closed lower, Kallanish notes.

On the Shanghai Futures Exchange, the most-traded January 2025 rebar contract closed at CNY 3,486/tonne ($494/t) on Tuesday, down CNY 65/t from the prior trading day. The same contract for HRC lost CNY 42/t to CNY 3,601/t.

The market spent the past week with a mixture of expectations for further price hikes and fear of high prices. At the same time, the market hoped the meeting of the National Development and Reform Commission on Tuesday morning would bring good news to further stimulate macro sentiment. However, the press conference was uninspiring.

Sentiment in the steel futures market cooled rapidly, even though the stock market was still rising. The rapid rise, due to policy stimulus alone, was undermined by focus on demand, which has hardly changed. As price increases drive higher profit margins, resumption of steel production during the holidays was also putting pressure on steel prices.

Market expectations for demand before the winter are higher than before. The government's stimulus has strengthened expectations for accelerated infrastructure construction. However, in the short term, the calming of sentiment may lead to a price correction.