Iron ore, steel price pare losses amid mixed concerns over recession, China ahead of US NFP

Iron licks wounds during the sixth loss-making week, steel prices seesaw around monthly high.
Fears of weak demand from China joins central bank aggression to weigh on prices.
Steady decline in Chinese steel inventories favors the industrial metal prices.

Anil Panchal FXStreet

Metal prices struggle to defend the latest recovery moves as traders await the US employment data during early Friday morning in Europe.

That said, iron ore futures print mild gains while steel price seesaws around a monthly peak as traders consolidate recent moves.

Even so, iron ore braces for the sixth weekly fall in prices of the front-month September contract on the Singapore Exchange, up 4.3% around $110.30. The stated iron ore contract tested the lowest levels in nearly two weeks the previous day, to $104.70. Elsewhere, China's Dalian Commodity Exchange, the most-traded January 2023 contract advanced 0.9% to 711.50 yuan ($105.45) a tonne, said Reuters.

On the other hand, steel rebar prices on the Shanghai Futures Exchange rose 0.5% whereas hot-rolled coil and stainless steel gained 0.7% and 0.4% on a day by the press time.

A rebound in the steel margins previously prompted some of the producers to restart their manufacturing facilities. However, those manufacturing units couldn’t run at full capacity and continued to signal the supply gap, as per Reuters. The news also mentioned that steel stocks held by traders in 132 Chinese cities surveyed by Mysteel consultancy dropped 603,700 tonnes from last week to a six-month low of 20.3 million tonnes, as of Aug. 4. Inventories at 184 Chinese steel mills declined for the sixth week during July 28-August 3, to 4.76 million tonnes, Mysteel reported, per Reuters.

Talking about China, the ailing property sector, COVID-19 curbs, steel production cuts, and Sino-U.S. tensions over Taiwan are the key catalysts that keep metal buyers hopeful. However, broad recession fears exert downside pressure on metal prices.

Looking forward, the metal traders should pay attention to the risk catalysts and yields ahead of the US Nonfarm Payrolls (NFP) for July, expected 250K versus 372K prior, for clear directions.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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