2016 is shaping up to be a better year for steel than we had expected. The secret of its success? As ever, China. Trapped between the immediate need of reviving a slowing economy and the structural necessity of reforming excess capacity in the steel sector, the Chinese government ended up stimulating the construction sector. As a result, steel prices shot up in China from US$270/tonne in December 2015 to US$400/tonne in April. Prices have since retracted, and between sluggish demand growth and lingering overcapacity we expect them to remain practically flat in the medium term. It is only in the long term that we expect demand growth and costs structure to support a sustainable price recovery.