China's infrastructure construction projects have shown signs of warming up stimulated by the CNY 4 trillion spending, generating demand for steel products. And analysts believe the demand would pick up further with steel prices likely to stabilize.

Mr Zhai Xu director of Guotai Jun'an steel futures research center according to its survey in Shanghai, Shanxi, Hebei, Chongqing and Shenzhen etc new orders mount up for government backed key projects, like highway, subway, airport and turnpike etc with some of them having started construction since last month triggering large demand for wire rod and rebar.

Mr Zhai noted that demand for wire rod and rebar would be further released with the construction activities coming into full swings in days to come. He said that it needs about 3 months to generate steel demand after a project was fully funded, that means, demand for wire rod and rebar would gradually come out in April and reach a high level in May and June given its startup in January.

Meanwhile, the projects broken ground in the first quarter are generally the previous work of road, railway and subway in cities; while the following fully construction of highway, low cost houses, airport and turnpike would bring more demand for the two varieties of products.

Statistics show that investment in infrastructure projects posted high growth in the Q1 with spending in railways climbing 171.8% from a year ago to CNY 64.1 billion, investments in highway and ports construction up 56.3% and 21.2% to CNY 112 billion and CNY 16.4 billion respectively.

Mr Zhai said however, analysts remain cautious towards future market in light of the low social investment scales and dull real estate market. Steel prices upturn still hinges on demand pickup owing to the supply glut this year. Meanwhile, production, costs and demand in housing market also determine whether steel price can form a considerable uprises.