The upside room of steel prices will be limited after the Chinese New Year 

Ferrous metal prices weakened this week. Early in the week, A-share market experienced large adjustments, fuelling market pessimism. In terms of ferrous metal products, pre-holiday stockpiling of upstream and downstream sectors came to an end. In addition, mainstream sellers, warehouses and downstream companies took holidays. Thin transactions unfolded.
Looking forward, post-holiday stockpiling by steel mills may boost raw material prices. Moreover, there will be the Two Sessions and expected arrival of a peak season. Therefore, steel prices will have strong support. According to the latest SMM survey, HRC supply may increase in February. The manufacturing industry will resume work around February 18. The supply hike will be greater than demand uptick, curbing upside in steel prices. We will keep an eye on post-holiday production resumption of steel mills and inventory changes.