Rumors have recently been circulating that many steel plants in China's Shanxi province will idle their rolling capacities for a long period during the second half of 2010, as they aim to meet targets under China's scheme for energy saving and emissions reduction. There is also a widespread view that for the same reason the overall Chinese steel sector will probably come under pressure to reduce production towards the end of the current year.
Since July, steel prices in the Chinese domestic market have in general - despite some fluctuations - continued to trend up in line with the rises in raw material costs. Furthermore, as observers have commented, the scheme in question will lead to reductions in steel supplies in the coming period, which would have the effect of pushing steel prices up further.