Steel prices drop further on soaring Covid-19 cases in China, monsoon dents demand forecasts

Steel prices have taken a hit as rising cases of Covid-19 in China, and the arrival of the monsoon has trimmed the demand forecasts for steel. The steel mills producers in China have dropped their production as lower steel prices are eating their profit margins.

The China economy is failing to contain the spread of the pandemic. The recurring resurgence of Covid-19 in China has scaled down their manufacturing activities and, subsequently, the steel demand. Despite the implementation of the zero-Covid policy, cases of Covid-19 are surging daily. After reporting more than 1,200 new cases over the weekend, the economy reported almost 700 cases on Monday. The cases of the pandemic are increasing at an increasing rate, which may not only affect the production process but will also trim the personal demand.

The already weak steel market is facing headwinds from the arrival of the monsoon in many provinces of China and other parts of Asia. The monsoon season carries a negative relationship with the steel demand. The arrival of monsoon results in a suspension of ongoing construction activities and postponement of infrastructure projects and real estate.

Meanwhile, the Chinese economy is focusing more on converting the steel sectors more disciplined manner. As per Bloomberg, the economy plans to set up a state-backed iron-ore company, overseeing everything from massive mine investments in West Africa to buying steel products from global suppliers. A management team will be composed of top officials from major metal firms to manage the same more efficiently.