In China, rebar traders spent January adjusting to the realisation that the rebar market did not tighten as they had feared between mid-November and late December, when they pushed prices up in a vertical frenzy. As traders took stock of the weakening construction demand, average rebar prices fell US$90/tonne month-on-month. In part, demand weakened because of stricter controls on provincial spending; in part because of the winter slow-down; and in part as a result of the anti-pollution controls which mandated the halt of construction activities. Winter rigours also loosened the resolve of the Chinese regulators. In order to heat the population in the Northern cities, the authorities allowed the restart of blast furnaces, also increasing steel supply and undermining prices. We now expect prices to stabilise in the near term, until Lunar New Year is over, and we expect most of the further downward adjustment to prices to take place in Q2, after production controls are removed.