- Steel price remains steady around weekly peak amid sluggish session.
- US dollar pullback, hopes of China stimulus favor buyers.
- Expectations for more output from India, recession fears and hardships for Chinese steel manufacturers weigh on prices.
Steel price remain mildly bid around a one-week high, flashed the previous day. It’s worth noting that the hopes of more stimulus from China and the US dollar pullback underpin the latest rebound in the metal prices even as the recession woes challenge the bulls.
With this, the most active steel rebar contract on the Shanghai Futures Exchange (SFE) rise 0.50% while the hot-rolled coil rose 1.4%. Further, stainless steel climbed 0.4% to 15,430 yuan a tonne at the latest.
China’s readiness to battle the recession woes with a heavy injection of funds seems to have favored the latest optimism among the metal buyers. “More measures from China to support its beleaguered property sector lent further support. China on Monday cut benchmark lending rates and lowered the mortgage reference by a bigger margin to boost its economy hurt by COVID-19 outbreaks and a property crisis,” said Reuters.
On the other hand, Reuters also mentioned that the longer-term outlook remained cloudy as a resurgence of COVID-19 cases and a slowdown in the global economy continued to weigh on steel demand.
It should be noted that the US Dollar Index (DXY) retreats from its intraday high as traders await the US Durable Goods Orders for July, expected 0.6% versus 2.0% prior, for fresh impulse. Also likely to have weighed on the greenback could be the expectations that Fed Chairman Jerome Powell would repeat his attempt to tame hawks during Friday’s speech at the Kansas City Fed’s symposium in Jackson Hole.
Elsewhere, recession fears in Europe, mainly due to the energy crisis, joins India’s hopes of becoming the world’s top steel producer seem to exert downside pressure on the steel price.
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