Steel prices see more downside on renewed lockdown fears in China
- Steel prices are expected to display more losses on expectations of a lockdown in China.
- Back-to-back lockdown announcements in China will dampen the sentiment of the market participants.
- The confluence of recession fears, lockdown worries, and monsoon arrival will keep steel prices on tenterhooks.
Steel prices have been declining for the past few weeks after the steel mill owners halted the production of steel due to a major slump in the overall demand. The already lower demand market is expected to see more vulnerability amid renewed fears of lockdown restrictions in China.
Major Chinese cities: Shanghai and Beijing were facing the headwinds of the resurgence in Covid-19. Manufacturing activities were halted and the PMIs data was declining firmly. The pandemic fears have grown again on rising Covid-19 cases in China and the administration is likely to announce lockdown curbs to contain the same. This will lead to further loss in the steel demand in China.
Earlier, the steel prices saw a sigh of relief after China announced a state infrastructure investment fund that would be worth the Chinese Yuan (CNY) 500 billion ($74.69 billion) to boost infrastructure spending and to bring a revival in the flagging economy, as per Reuters. The usage of steel in infrastructure building remains extremely high and higher infrastructure development in the Chinese economy will spurt the demand of steel.
Now, the escalating lockdown fears and the arrival of monsoon in 14 provinces of China and other parts of Asia will deepen the demand worries. Also, the growing recession fears in the global economy will have an adverse impact on the steel demand. Soaring price pressures will spurt the real income shock further and the real estate sector will take the hit.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
