Chinese steel futures pulled back slightly over the day’s trading on Wednesday. As the trade war rages on, China is again turning to infrastructure to bolster economic sentiment, Kallanish notes.

On the Shanghai Futures Exchange the January 2019 rebar contract closed at CNY 4,144/tonne ($604/t), CNY 22/t lower than Tuesday, while the same contract for hot rolled coil closed down CNY 39/t at CNY 3,982/t.

The decision to impose import tariffs on $60 billion of US goods was a slightly less robust retaliation than first expected. China chose to reduce the tariffs charged from its original statements, charging only 5-10% instead of up to 25%. Analysts suggest the higher rates are being held back to retaliate against the next tranche of US tariffs on Chinese goods.

More directly relevant to the steel industry however was the National Development and Reform Commission (NDRC) statement in support of infrastructure spending late Tuesday. It said investment would be ramped up, and construction of already-approved projects would also be sped up. That all suggests the ailing infrastructure investment sector should get a boost in the remaining months of the year. In fact, the road building sector is already strong but railway investment has declined this year and this is the sector likely to see the biggest gain in the near term. Whether this is enough to combat the more general slowdown in the economy and investment remains to be seen however.