Over the last two days, Chinese steel prices have jumped between 2-5%. Does that mean that Chinese construction is red hot again? The answer is no. the reason for the price increase is Chinese governments (local and central) had ordered the closing of some steel companies to meet their energy consumption target. It is a supply shock. It can be reversed anytime. Be careful to base your investment decision on the steel price in China.
The market is due for a correction.
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