Chinese prices could see their recent weekly cycle continue next week as production restrictions in Tangshan give the perfect excuse for another upsell. Price increases in Tangshan billet over the weekends have been key triggers for the jumps in steel futures and iron ore prices seen at the start of each week, which have so far successfully overcome the downturns seen at the end of each week, Kallanish notes.

The start of key restrictions on steelmaking and processing activity in northern China’s Tangshan city due to the World Horticultural Exposition are likely to have both a limited and a mixed impact on the real steel market. A reduction in re-rolling activity could actually reduce local demand for billet, which has been a key spark for price increases elsewhere.

A CNY 90/tonne jump over the last weekend was the latest move to trigger both futures and spot market prices to spike over Monday-Tuesday. That may be outweighed by increasing finished steel prices however, which could still drag up billet prices despite restrictions reducing buying levels.

In fact, the impact on fundamentals may be less important than the role of restrictions in allowing mills and traders to talk up prices. With Chinese steel prices driving the recovery globally, focus is increasingly falling on the sustainability of the recent bull run, but even with traders sales volumes no longer as strong, strong sentiment on the Chinese economy means that another hike may be possible at the start of next week.