Steel price renews three-week high near $550 on downbeat China exports, DXY
|- Steel price takes the bids to extend previous day’s gains towards monthly top.
- China’s steel exports dropped in June, signs of further output reduction persist.
- DXY renews multi-day low as “technical recession” chatters push back Fed hawks.
- US PCE inflation data will be crucial for fresh directions.
Steel price remains on the front foot as bulls revisit the early July highs amid softer US dollar and supply crunch fears during Friday’s Asian session. Also keeping the metal buyers hopeful are the headlines suggesting more stimulus from the largest customer China.
While portraying the mood, the most active steel rebar contract on the Shanghai Futures Exchange (SFE) rises to a three-week high of around 4,000 yuan per metric tonne (close to $537). It’s worth noting that the stainless steel contract also recovered from the two-month low, up 1.32% on a day around 15,280 yuan per metric tonne at the latest.
“In the first half of 2022, China exported a total of 33.46 million mt of semi and finished steel, a year-on-year decrease of 10.5%, and imported a total of 5.77 million mt of semi and finished steel, a year-on-year decrease of 21.5%,” said SMM news.
On a different page, US Dollar Index (DXY) drops to the fresh low since July 05 as the Treasury yields remain pressured around a three-month low amid recession fears. The US 10-year Treasury yields fade early Asian session rebound while declining to the fresh low since April, near 2.67% at the latest.
Additionally helping steep price is China’s readiness for more stimulus as Reuters reported, “China will strengthen efforts to stabilize foreign trade in the second half of the year, the commerce ministry said on Friday.”
However, fears of the “technical recession” weigh on the metal prices after the US Q2 Gross Domestic Product (GDP) dropped for the second consecutive time and teased the concept.
To sum up, the supply crunch and softer US dollar appear to please the metal buyers. However, the impending release of the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index, expected 0.5% MoM for July versus 0.3% prior, tests the upside moves.
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