Steel gains amid Chinese stimulus measures to spur growth.
Steel yesterday settled up by 0.13% at 46120 as policy support for China’s faltering economic recovery and optimism over its near-term demand prospects underpinned prices. Some mills in China’s steelmaking hub of Tangshan city have suspended sintering operation for one week from Aug. 24 as required to improve air quality. Market players noted that the implementation of macro and micro-targeted easing policy measures returned on the municipal scale, while another report stated that Beijing permitted 12 provinces to issue CNY 1.5 trillion of special financing bonds.
The measures respond to a series of data underscoring the slowdown in the Chinese economy and recent concerns that deflationary pressure for housing could trigger a crisis in the Chinese financial system. Besides efforts to stimulate consumption, the outlook of lower construction demand drove the Chinese government to significantly lower the production outlook for 2023, resulting in activity halts for key mill hubs.
Global crude steel production increased by 6.6 per cent in July to 158.5 million tonnes (mt) against 148.9 mt in the same period a year ago. For the January-July period, production in the 63 nations that account for 97 per cent of world steel output was pegged at 1103.2 mt, down 0.1 per cent. According to the World Steel Association (worldsteel), top producer China produced 90.8 mt in July, up 11.5 per cent compared with the year-ago period.
For the January-July period, China’s output was 2.5 per cent higher at 626.5 mt. India reported a 14.3 per cent rise in production at 11.5 mt. Steel production in Japan and United States went up by 0.9 per cent and 0.5 per cent, respectively, to 7.4 mt and 6.9 mt. Output in South Korea and Brazil dropped by nine per cent and 4.7 per cent, respectively, at 5.7 mt and 2.7 mt.
Technically market is under fresh buying as the market has witnessed a gain in open interest by 2.13% to settle at 1920 while prices are up 60 rupees, now Steel is getting support at 46050 and below same could see a test of 45970 levels, and resistance is now likely to be seen at 46230, a move above could see prices testing 46330.
Yes, that’s correct! Steel prices did experience a rise recently due to positive developments in China. Here’s a breakdown of the situation:
- Chinese Stimulus Measures:Â The Chinese government announced measures to stimulate their economy, which includes increased infrastructure spending [2].
- Impact on Steel Demand:Â Since steel is a vital material in construction projects, a rise in Chinese infrastructure spending is expected to boost demand for steel. This positive outlook on demand growth is a major factor driving up steel prices.
- Price Increase:Â News reports from early April 2024 mentioned a rise in steel futures in India, likely due to optimism surrounding Chinese stimulus measures [2].
Additional Points to Consider:
- The global steel market is complex, and other factors like supply chain disruptions or production costs can also influence prices.
- While Chinese stimulus is positive news, it’s important to monitor the overall market situation for a complete picture.
If you’d like to stay updated on steel prices, you can check financial news websites or visit the websites of stock exchanges in India like the National Commodity & Derivatives Exchange Limited (NCDEX).