Chinese flats suppliers eying for recovery before the Spring Festival

Despite gloom writ large in Chinese steel market despair is the last word in the global depository of steel. Churning out volumes in the worst of times is miracle witnessed only in China and the hope for revival never dies.

Chinese economy despite slothfulness has clocked nearly 7.6% GDP in 2013 way ahead of global lagers who have not been able reach half of it. Approaching Spring Festival in early February has traditionally been phase of heightened demand and activity before the holidays and in anticipation of pick up in construction and industrial activity during spring and summer season.

Most of steel makers have pegged their hopes on revival despite slow demand. However situation has barely changed for the moment with the most active rebar futures for May contract on the Shanghai Futures Exchange lost 1 percent to CNY 3573 per tonne by close, as demand outlook remained shaky despite firm raw material prices.

Some recent weather happenings have disrupted supply from the two main exporting countries of Australia and Brazil. It has led to spike in Iron ore price levels.

Chinese iron ore futures extended gains to hit a two-week high on Monday amid supply concerns. The most-traded iron ore futures May contract on the Dalian Commodity Exchange rose to a session high of CNY 920 ($150), a level last seen on Dec. 17.

Obvious fall out will be squeezing of the margins of steel makers unless demand picks up before Spring festival.