untitled design

Steel: Renews its monthly maximum due to moderation on fears of China’s covid

  • Steel price renews monthly high as China does not please bulls.
  • PBOC rate cut contrasts with softer data testing metals buyers, lack of loan demand renews recession fears.
  • Weak US dollar adds filters to steel trade, Shanghai eases covid restrictions, favoring bulls.

The basket of metals remained surprisingly firmer, despite risk-negative headlines coming out of China, as traders appear to prepare for Wednesday’s Federal Open Market Committee (FOMC) meeting minutes.

The price of steel also follows the trend and refreshes its monthly maximum, in regards to the price of steel bars on the Shanghai Futures Exchange (SFE). Having said that, the price of steel bars is around 4,150 yuan per tonwith a rise of almost 1.0%.

The latest rise in steel prices could be linked to the People’s Bank of China (PBOC) rate cut. In effect, the PBOC cut one-year Medium Term Loan Facility (MLF) rates by 10 basis points (bp).

Along the same lines could be the improvement in coronavirus conditions in the Chinese financial center of Shanghai, which led to the reopening of schools after several months of closures caused by the coronavirus.

By contrast, China’s retail sales fell to 2.7% yoy in July, vs. 5.0% forecast and 3.1% previously, while Industrial Production (IP) dipped to 3.8% over the reported month, vs. 3.9% previously and 4.6% expected by the market.

It is worth noting that the likely meeting between US President Joe Biden and his Chinese counterpart Xi Jinping, as reported by the Wall Street Journal (WSJ), could favor risk appetite and oil prices. steel.

Aside from China-related catalysts, receding inflation figures and hawkish bets on the Fed’s next move also favor steel buyers. However, it all depends on this week’s Fed minutes, which could weigh on metal prices if policy makers are willing to further rate hikes.

Source: Fx Street

You may also like

Get the latest

Stay Informed: Get the Latest Updates and Insights

 

Most popular