SHANGHAI, Apr. 2 (SMM) – The detailed rules for property market control rolled out by local governments were basically in compliance with policy of central government. Market players believe no more negative policies are expected in the short term after the introduction of detailed rules. Hot-rolled steel prices fell on Monday as a result, with the most active contracts in futures market and electronic trading exchange down RMB 90/mt and RMB 74/mt to RMB 3,723/mt and RMB 3,727/mt, respectively.

Spot hot-rolled coil prices were relatively firm, with prices down RMB 20/mt in Shanghai while those in Lecong remained little changed. Transactions were also satisfactory. However, the slump in futures prices may indicate change of attitude towards property market.

First, rigid demand for steel will be released gradually after the introduction of the rules for property curbs, but the government will issue more policies to contain housing prices against any rebound in the future. This may erode profits of the housing sector and affect property investment.

Second, funds available to property developers will be negatively affected by tighter capital regulation, with capital injected for property development slowed.

Third, the introduction of registration system for real estate in 2014 will lay a foundation for levying property tax, and more measures will be taken should housing prices stage any sharp movements.

In this context, most property developers are watching on the sideline, which will exert influence on this year’s house demand. As such, steel production plan targeting downstream sectors excluding housing sector is expected to rise. The slowing decline steel prices at present is due mainly to seasonal recovery of downstream demand, and prices still lack impetus to rise as negative prospect for housing market will pose downward pressure to prices.