China’s steel prices, output and spot import purchases are rising on expectations that its top legislative body will announce more stimulus policies next week.

China’s ferrous sector has already been supported by the country’s quick recovery from the Covid-19 outbreak and restart of steel-intensive industries, while most other regions have cut output and prices.

Shanghai rebar prices have risen by 50 yuan/t ($7/t) to Yn3,490/t and hot-rolled coil HRC prices have moved up by Yn110/t to Yn3,400/t this month. The rising price premiums in China’s 1bn t/yr market have led to another wave of spot imports of semi-finished and finished steel products and increased domestic output as mills chase wider profit margins.

China iron and steel association (Cisa) members’ steel output rose in early May at the highest pace since September 2019. Cisa members averaged 2.05mn t/d of crude steel output during 1-10 May, up by around 2pc from 21-30 April and by 0.3pc from a year earlier, Cisa said.

Cisa mill inventories fell by 0.45pc from late April to 14.7mn t in early May, but this was up by more than 50pc since the start of the year.

“The rising output and falling inventory amid a large amount of imports recently reflect the strength of China’s domestic demand,” a Shanghai-based trader said. Mills and traders expect a further stimulus to be announced during the 13th national people’s congress (NPC), which convenes on 22 May, which was delayed from March by lockdown measures.

There is some talk in the market that the congress may pass a Yn10 trillion stimulus package, but no one can be sure before the meetings, a north China steel trader said. New infrastructure spending is likely to be the core of the package, he said. Policies will focus on promoting consumption and supporting employment, but industry and infrastructure will remain the most important sector of the economy, an east China trader said.

It is unclear whether the congress will set a 2020 GDP target after first-quarter GDP contracted by 6.9pc from a year earlier. If it does set a target, it will be lower than for 2019, participants said.

China’s economic data shows its industrial and construction sectors have mostly recovered with the virus under control. Excavator sales surged by 60pc on the year in April, and daily power consumption has risen to year-ago levels. The state council issued guidelines last week for the reopening of cinemas and other large venues, and the central bank’s statement this weekend struck a more dovish tone than previous statements.