The exodus of Chinese steel traders towards their home towns for this year’s Chinese New Year holiday has already started, a week before the traditional Spring Festival celebrations (February 18-24) officially begin, according to sources who talked to Platts. Only some state-owned and major trading firms will stay open till the end of this week, dealers in Shanghai said.
“Shanghai hosts a huge population drawn from elsewhere in China and most people can return to their home towns only once or twice a year,” observed a trader in Shanghai. “So most prefer to leave as early as possible, to have more time for their families over the Lunar New Year holidays.”
Shanghai hosts some 3,000 to 4,000 steel merchants, most of which are small and medium-sized and almost all of which had halted business by the end of last week. Only those large and state-owned trading firms still holding inventory were still active, a Shanghai-based dealer said. And these would shut at week’s end.
His view was echoed by a second dealer in the region, adding that about half the dealers nationwide had started holidays by Tuesday. Moreover, the stoppage of prominent e-commerce platforms for steel would lead more traders to shut up shop in coming days.
Zhaogang.com, an e-trading platform in Shanghai, will end trading on February 12 and will not re-open until February 28. The move will inevitably lead those Shanghai-based trading firms with high reliance on the platform to stop also. Other dealers dismissed any impact though, saying the early office closures were prompted by the slow market, not the trading platform closing.
Two other e-commerce platforms, steelbank.com in Shanghai and sc.opsteel.cn in southern China’s Lecong city, said their businesses would operate normally till February 17.
“Steel prices are likely to stay stable pre-holidays, leaving no speculation room or profits for dealers,” an analyst with Everbright Futures said. “Thus it is reasonable for [dealers in Shanghai] to leave earlier.”
source: Platts
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