An interesting development occurred this week in China that could have a major impact on the country's steel market.
For the first time since October 2015, China lowered interest rates on short-term loans. Although this development might not get too much publicity, it still plays an important role in the country's economic development.
This move to cut borrowing costs should help boost their slowing economy, ultimately increasing the demand for key building materials (i.e. steel).
Also announced recently from the Chinese government is a new clean air campaign for the country’s steel and coal region. This move should continue and possibly further production cuts during the winter.
On the back of these two moves, Chinese rebar prices increased to their highest level in three months. While China is eliminated from importing any material to much of the developed world, at the end of the day they set the floor for global pricing.
Higher Chinese steel pricing typically trickles down to higher Chinese exported semi-finished prices to Turkey, which would make US scrap exports more attractive to the region. This upward momentum around the globe will continue to push the steel market at home.