Earlier issuance of local bonds to buoy steel market in Q2

SHANGHAI, Jan 16 (SMM) – China approved the issuance of local government debt earlier than usual for 2019 and stepped up investment to infrastructure projects. This will accelerate the release of downstream demand and buoy prices of steel after CNY and through the second quarter, SMM expects.

Xinjiang Uygur Autonomous Region initially issued 10 billion yuan of local government general bonds for 2019, according to an official notice on chinabond.com on Tuesday January 15. 

Market participants told SMM that one billion yuan of investment in railroad infrastructure is likely to increase steel consumption by 33,300 mt. Among this, rebar accounted for some 40%. 

Issuance of local debt, typically occurs after China's two poltical meetings in March, came earlier this year as an effort to offset weakness in January's exports and in broader economic growth, SMM believes. The National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), are annual meetings of the national legislature and the top political advisory body. For 2019, the 13th NPC will hold its second annual session in Beijing on March 5.