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Cooling property market dampens steel futures

  • Published 12 May 2010

Real estate transactions from 21 cities weakened for the fourth consecutive week since further real estate tightening policies were released by the central government on April 17. The ripples have clearly begun to impact the steel industry, significantly dampening expectations of continued price hikes for construction steel and pausing the price recovery that has seen rebar prices grow by over 15% since the start of the year.

For the week ending May 11, our seven day moving average of transaction volumes for first tier cities fell by 26% to 67,560 sq m per day. The aggregated seven day moving average for 17 second tier cities lost 6% to 287,957 sq m per day. Both indicators are now down about 61% since this year's peaks in mid April. However, some individual cities experienced a slight bounce. Shenzhen saw its average daily transaction volume on May 11 rise 49% over May 4 to 4,312 sq m per day, but this only represented 1,500 sq m more per day due to a low base. At the peak in mid April, daily transaction volumes hit around 14,000 sq m in the city.

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