Our local research suggests there is a fundamental weakening of sentiment in China, as buyers hold off while suppliers seek to sell stocks built up over a period of months before prices decline further. In contrast to Europe, where sentiment has lifted, China is experiencing the opposite; market participants believe that the stockpiling of molybdenum which fuelled much of the recent purchasing activity has come to an end and, in addition, there is a view that the outlook for the Chinese stainless steel industry has become somewhat lacklustre. This represents a reversal of fortunes. At this time last month, Chinese sentiment appeared healthy and indeed Western sentiment was driven, at least partially, by perceived improvements in China. Now, however, Western confidence seems to be more driven by local improvements, albeit marginal ones.
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