Almost a month long decline in steel prices in the pink of consumption season has not only belied hopes in the trade but also given a food for thought to the policy makers.

An unexpected if not surprising decline of 2% in steel prices during the last month might just tweak the government into correcting the lending rates. Chinese steel market has been at the vanguard of global steel market sentiment has turned a cropper with an unbroken streak of disappointments since August 2011.

Realistically after the back breaking collapse owing to US downgrading and European crisis Chinese market has paled into oblivion. However the growth addiction set by it during the worst times has taken long to bring the other markets to terms with the emergence of new paradigm.

Class	12-Apr	7-May	Change	%
CLPPI	7776	7605	-171	-2.2%
CFPPI	6877	6805	-72	-1.0%
CHISPI	7266	7152	-114	-1.6%

CLPPI - Chinese Long Product Price Index
CFPPI - Chinese Flat Product Price Index
CHISPI - Chinese Steel Price Index

Government has been steadfast in its resolve to rein inflation in the final year of the Prime Minister and President. State lending policy has remained captive to the paranoia of inflation in a socialistic society. However it is likely that the state must have gone in overdrive squeezing the last ounce of enthusiasm from a boisterous economy.

Reportedly state might think of relaxing the noose around interest rates in a bid to fillip buying lest they lose sight of growth.

Source - Steel Prices China