Expectations for restoring the Chinese construction sector with support for steel

The construction of activities in China shows early improvement in the decline in the pressure of the debt of local governments, which according to the “Goldman Sachs” bank can form a group of commodities, including steel. The bank analysts, including Tina Chen, wrote in a report that Beijing’s efforts to resolve the local governments’ debt crisis revived infrastructure activities, explaining that the evaluation came after a visit to China and held about 40 meetings. The bank said its discussions in China made ‘an early confirmation’ for its positive vision on the demand for basic commodities by the construction sector. During the years, the real estate crisis in China has affected all the goods used in the construction industry. Iron, who is the most important component in the steel industry, has lost more than a quarter of its value since the beginning of last year. Restoring the demand for steel has made more efforts to support the sector during its recent Beijing policy. This comes at a time when the demand for goods used in infrastructure projects begins to rise, representing up to 36% of China’s steel consumption, according to the Goldman Sachs estimates. At the same time, the Chinese steel sector, which produces one billion tonnes annually, sees a wave of speculation about the possibility of applying reforms to the supply side, amid the fear that the increase in criticism of the country’s exports will aggravate the surplus production. “There is a clear message that confirms the need to tighten control over production to restore declining profitability and avoid any possible financial crisis,” says Goldman Sachs, noting that the reduction of production by about 50 million tonnes of steel is likely. Meanwhile, the future Iron -RU contracts in Singapore rose 1.3% to $ 103.55 per ton at 12:06 p.m. local time, with the on the way to the first weekly profits in three weeks. Iron ore contracts in Dalian also rose, along with arming iron contracts and hot steel -torn in Shanghai.