- 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.
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