Beijing will extend measures to stimulate economic growth, including further reduce the threshold of mandatory reserves requirement ratio (RRR) for banks to reduce financing costs and provide more funds for business development, said on December 23 the Prime Minister of China Li Keqiang.
China's State Council, the highest governing body of the country, confirmed the words of Lee, two days after he announced that China will open more sectors to private firms.
market watchers expect the next RRR reduction will be made about the 1st of January, maybe Friday night, which is typical to free up liquidity in anticipation of new year holidays. A reduction in RRR will have a limited impact on the physical trade in steel, which has already received support from previous action.
last month, the Ministry of Finance provided the population of China's 1 trillion yuan (about 140 billion U.S. dollars) in government bonds of the provinces up to 2020, stimulating locals to use the money as soon as possible so the results will be visible early next year. The accelerated bonding and weakening of measures to restrict property purchases have increased the demand for steel in the end of this year.
Export prices for hot-rolled steel (HRC) in China since the beginning of November rose by US $ 55 / ton, or 13%, to 482 USD / ton in China. Shanghai prices increased by 390 yuan / ton (about $ 55 / ton), or 11%, to 3,900 yen for the same period.
on Monday, the Ministry of Finance of China said it will reduce import tariffs on 859 items to support growth. The reduction of tariffs will have a limited impact on the steel markets.
December 22, the Chinese State Council issued guidelines aimed at opening a larger number of sectors of the economy for private firms, dominated by state companies. Among the measures - reduction in tax rates and expansion of access to Finance. China seeks to expand its oil and gas pipeline network with the participation of the private sector. Additional demand for steel pipe support steel prices.
Growth in steel demand in China and the alleged deal with the United States will favorably affect the global steel industry, which in 2020 will be released at a consistently high level of profitability.
