- Steel prices are picking offers on lower consumer confidence globally.
- Renewed fears of lockdown in China have trimmed the demand forecast for steel.
- The Chinese economy has reported more than 1,200 new Covid-19 cases over the weekend.
Steel prices have dropped significantly as production expectations have been trimmed significantly to the worse for the first time in two years after the pandemic. The market participants have slashed the output forecasts as higher price pressures are biting the margins of the company.
Higher raw material prices and a simultaneous decline in the overall demand due to real income shocks and lower consumer confidence have dampened the demand for various commodities.
As per the report on Global Business Outlook from S&P Global, the net balance of companies globally is indicating a rise in business activities over the year by 22%, which is well below the decade high of 41%. The recorded figure of 22% is the lowest since the emergence of Covid-19.
Interest rate escalation by the central banks has squeezed liquidity from the market, which has forced companies to tap cost money to fund their investment opportunities. This has forced the think tanks of the market to trim their forecasts for growth significantly. Consumer confidence has dropped to the lowest in two years in the US and eurozone.
Also, renewed fears of lockdown in China have forced the market participants to wind-up longs in steel. The Chinese administration has reported 1,200 new Covid-19 cases over the weekend. There is no denying the fact that the Chinese economy will resort to a zero-Covid policy again and will announce lockdown curbs to contain the spread.
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.