Last fortnight had been a welcome reprieve for the steel market in China as the prices had improved by 2 % during the last fortnight arousing hopes of seasonal demand revival. Buying activity as well as the steel futures also exuded confidence.

However in mid of last week a sudden silence dawned upon the market indicating correction after the flurry. Opinions were ambivalent about the duration of corrective mode. Government concern about rich liquidity and global boom in commodity prices nudged them to carry out the 4th hike by 0.5% in lending rate on 17th April.

The mood had become somber towards the middle of last week as the hike interest rate was round the corner. It deflationary measures of the state have become bête noire for revival in price levels.

With the reserve requirement ratio already at 20% for the major Chinese banks liquidity is constricted. The Yuan hitting a fresh trading high against the USD on Wednesday as the People's Bank of China unleashed a new leg of appreciation to help fight imported inflation.

Resultantly the buying has become low key culminating in price correction for finished as well as raw material.

The silver lining is decline in inventory of rebar fell 233,420 tonnes to 6.61 million tonnes, while that of HR lost 60,390 tonnes to 4.64 million tonnes coupled with the pick-up in demand during the season.