Steel Price extends losses as China, Europe signal demand-supply mismatch amid recession fears


  • Steel Price pares late June gains even as US dollar pullback probes sellers.
  • European markets hint at ‘almost zero’ demand for steel beams.
  • China’s covid resurgence in Anhui, bearish move in steel raw materials exert downside pressure on economic concerns.

Steel Price recalls bears after a brief absence during the last week as economic fears join the imbalance of the demand-supply matrix.

That said, the Construction steel rebar on the Shanghai Futures Exchange (SFE) fell more than 3.0% to 4,181 yuan per metric tonne while hot-rolled coil dropped around 3.5% and stainless steel dipped 0.9% per the data source Reuters.

The industrial metal’s latest weakness ignores the US dollar pullback from a two-week top as demand from the largest customer China and Europe appears limited of late.

The American Metal Market (AMM) source mentioned that bearish sentiment in the market due to falling scrap feedstock prices has limited buying activity for several weeks, per Reuters. Another AMM source from China stated, “Many mills are cutting production due to the summer holidays, low demand and high energy costs.”

It’s worth noting that the recession fears gained more strength after Friday’s US ISM Manufacturing PMI for June. The US ISM Manufacturing PMI for June slumped to the lowest levels in two years, to 53.0 versus 54.9 expected and 56.1 prior.  Considering the data, analysts at the ANZ Bank said, “Surveyed data from both PMIs and the US ISM are all pointing to faltering orders growth, lower backlogs of work indices and softer production over the summer. It is hard to escape the growing growth pessimism, which is also fanning expectations of a peak in both inflation and central bank hawkishness.”

Further, fresh covid-led activity restrictions in China’s Anhui province join Russia’s claim of having complete control over Lysychansk also weighing on the Steel Price.

Additionally, a strong downside in the steel raw material markets also exerts downside pressure on the metal. On Monday, iron ore slumped more than 6.0% to 716 yuan ($106.98) a tonne on China’s Dalian Commodity Exchange.

It should be observed that increased metal exports from Australia and Brazil also weigh on steel inventories and lure the bears ahead of this week’s key events, namely Federal Open Market Committee (FOMC) Minutes and the US Jobs report for June.

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD holds steady below 1.0800 ahead of EU data Premium

EUR/USD holds steady below 1.0800 ahead of EU data

EUR/USD is holding steady just shy of the 1.0800 mark in the early European morning. The US Dollar is consolidating the upside amid a cautious market tone, as investors assess Friday's US NFP blowout and hawkish Fed expectations. Eurozone data coming up next. 

EUR/USD News

GBP/USD attempts to cross 1.2050, downside looks likely amid US-China tensions

GBP/USD attempts to cross 1.2050, downside looks likely amid US-China tensions

The GBP/USD pair has attempted to extend its rebound move above the critical resistance of 1.2050 in the Tokyo session. The Cable gauged an intermediate cushion around 1.2000 amid subdued performance by the US Dollar Index (DXY).

GBP/USD News

Gold rebounds but not out of the woods yet Premium

Gold rebounds but not out of the woods yet

Gold price is making a tepid recovery attempt toward the $1,900 level at the start of the week on Monday. Gold buyers a breathing a sigh of relief after two back-to-back days of extreme sell-off.

Gold News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Is this the beginning of the end for bulls?

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Is this the beginning of the end for bulls?

Bitcoin (BTC) price is the glue that is holding this 2023 bull run intact for Ethereum (ETH), Ripple (XRP) and other altcoins. But chinks in BTC bulls’ armor are beginning to show, therefore, investors need to be cautious of a sudden reversal. 

Read more

The Week Ahead - RBA rate meeting, UK Q4 GDP and earnings

The Week Ahead - RBA rate meeting, UK Q4 GDP and earnings

Back in November the RBA hiked rates by a less than expected 25bps, amidst concern about the effects recent rate hikes were having on the Australian economy and ergo the housing market. At the time Governor Philip Lowe said that the RBA wanted to slow the pace.

Read more

Forex MAJORS

Cryptocurrencies

Signatures