LONDON (Commodity Online): From a policy perspective, some pessimism was generated in base metals last week by conclusions from a Chinese cabinet meeting on the property sector.

While the only immediate new measure announced was an expansion of the pilot property tax programme to more cities in the country, the Chinese government made it clear that it wants to stabilise expectations on property and keep a tight lid on prices, London based investment bank Barclays said in a report.

This points to constrained upside for metals demand from the construction sector. It was also announced that in terms of affordable housing, the current 2013 goal is for completions of 4.7mn units and 6.3mn new starts.

While essentially in line with previous announcements, this represents a 23% y/y increase from the 6mn units completed in 2012.

The Chinese property sector is a crucial driver of domestic base metals demand, currently representing 21% of total refined copper consumption, 38% of primary aluminium consumption, and as much as 55% of refined zinc consumption.

In terms of the factors most relevant to the base metals complex, however, China stood front and centre this week as well. This week has given market participants the first opportunity to gauge the post-New Years sentiment in the country; general observations have offered little in the way encouraging trends.

While many private enterprises remain on holiday for another week, thus delaying any finite conclusions, so far there has been no demonstrable improvement in physical market conditions.

Demand remains soft, premiums unchanged and physical price discounts firmly in place, while domestic inventories for some metals have also trend higher over the month. In particular, aluminium domestic stocks have risen close to 200Kt during February so far.

All in, the evidence so far suggests the post - CNY environment is unlikely to support any fast - paced near - term re- tightening in domestic metal market balances.