Steel Price rebounds from yearly low as risk-aversion ebbs, recession fears favor bears
|- Steel Price licks wounds at six-month low after falling nearly 500 yuan per metric tonne during the week.
- Lack of major data/events, softer USD allowed bears to take a breather.
- Fears of recession, doubts about production cuts and China’s covid conditions provide a trifecta attack on prices.
Steel Price consolidates weekly losses amid Friday’s sluggish Asian session as risk-off sentiment recedes amid a light calendar and lack of major events. However, the industrial metal bears remain hopeful as pessimism surrounding the demand outlook, as well as fears of further supplies, remains intact.
That said, the most active rebar contract on the Shanghai Futures Exchange (SFE) rises to 4,230 yuan per metric tonne (mt), up 1.30% on a day by the press time. It’s worth noting that the stated October 2022 expiry bearing contract slumped nearly 500 yuan/mt during the week while dropping to the lowest levels since December 2021 the previous day.
While a pullback in the US dollar and an absence of major data/events could be linked to the latest corrective bounce in the Steel Price, the overall fundamentals remain against the bullish bias and keep the metal sellers hopeful.
Among them, the recession fears are the key as steel has more to do with industries and could witness more demand during growth years than otherwise. Further, China’s “zero covid” policy weighs on the demand from the world’s biggest industrial player and drowns the metal prices. Additionally, fears of more production, especially from Asia, also exert downside pressure on the Steel Price.
It should be noted that the global central bankers’ rush towards higher rates intensifies recession fears and challenge steel traders especially amid fragile economic conditions.
Looking forward, the steel prices could witness further downside as a lack of growth optimism joins an unattractive demand-supply matrix.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.