Steel price renews monthly top on easing covid fears from China

Metal basket remained surprisingly firmer, despite risk-negative headlines from China, as traders seem to brace for Wednesday’s Federal Open Market Committee (FOMC) meeting minutes.

Steel price also follows the trend and refreshes monthly high, as far as steel rebar price on the Shanghai Futures Exchange (SFE), is concerned.  That said, the steel rebar price is around 4,150 yuan per tonne, up nearly 1.0% of late.

The latest run-up in steel price could be linked to the People’s Bank of China’s (PBOC) rate cut. That said, the PBOC cut the one-year medium-term lending facility (MLF) rates by 10 basis points (bps).

On the same line could be the improved coronavirus conditions in China's financial hub Shanghai that led to the reopening of all-format schooling after multiple months of coronavirus-led closures.

On contrary, China’s Retail Sales eased to 2.7% YoY in July versus 5.0% expected and 3.1% prior whereas Industrial Production (IP) edged lower to 3.8% during the stated month, from 3.9% prior and 4.6% market forecasts.

It’s worth observing that the probable meeting between US President Joe Biden and his Chinese counterpart Xi Jinping, as signaled by the Wall Street Journal (WSJ), could favor the risk-on mood and the steel prices.

Other than the China-linked catalysts, receding inflation numbers and hawkish bets on the Fed’s next move also favor steel buyers. However, it all depends upon this week’s Fed Minutes, which could weigh on the metal prices if the policymakers show readiness for further rate increases.