Steel Price extends recovery amid short-term supply crunch
|- Steel Price pushes the previous week’s recovery moves forward amid a sluggish session.
- Fears of more production loss can favor intraday buyers.
- Off-season, recession woes and concerns surrounding China challenge recovery moves.
Steel Price begins the week on a firmer footing as short-term supply fears favor buyers during a sluggish Asian session on Monday. Industrial metal’s recent gains could also be linked to the US dollar’s mixed performance.
The most active steel rebar contract on Shanghai Futures Exchange (SFE) rise around 1.0% to 4,265 yuan per metric tonne (MT) by the press time. The metal slumped to the lowest in six months during the last week as risk-aversion joined pessimism surrounding China.
Recently, the White House said, per Reuters, “The US is confident that NATO's new strategy document will include "strong" language on China, a White House official said on Sunday, adding that negotiations on how to refer to Beijing were still underway.”
Also challenging the steel demand could be the statements from the Bank for International Settlements (BIS) that supported faster rate hikes. On the same line are comments from International Monetary Fund (IMF) Managing Director Kristalina Georgieva, who said per Reuters, “Further negative shocks would inevitably make US economic situation ‘more difficult’.”
“Rebar output dropped palpably due to frequent production cuts across steel mills. In terms of rebar, the production was muted due to serious losses suffered by steel mills, and the overall supply slumped amid frequent production cuts,” said Shanghai Metal Markets (SMM) per Reuters.
The SMM news also mentioned that the rebar supply is likely to extend the declines as steel mills are increasingly less interested in producing when rebar prices keep falling, and more mills will join the queue of suspending the production for maintenance. In terms of HRC, the output increased slightly last week mainly because fewer steel mills were under maintenance last week.
Apart from that, US Durable Goods Orders for May, expected 0.1% versus 0.5% prior, as well as the Pending Home Sales, expected -2.0% versus -3.9% prior, will be important for daily directions.
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