February 2012 | Steel Raw Materials
Solving China’s New Year Hangover
As China's economic growth has slowed considerably in the early months of 2012, MBR looks at the outlook for raw materials prices in the coming weeks.
Please click here to view this breaking view as a pdf.
Chinese economic growth has failed to pick up pace in the resumption of work following the New Year holiday. Economic activity is generally quiet in the run-up to the holiday period as producers look to reduce inventory levels to free up cash. This normally results in a pick-up in activity in late January/early February as buyers come back to market. However, this year the recovery has failed to materialise. Iron ore inventory levels remain very high and buyers are unwilling to take part in large purchases that will leave them holding significant amounts of material should the economic situation deteriorate further and prices start to decrease.
In response to fledging growth in Q4 2011, Beijing finally relented and reversed its monetary policy in November 2011. Inflation had been a worry for the authorities through 2010 and 2011...
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