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Steel dropped due to concerns stemming from weak China trade data

Published 12-09-2023, 01:51 pm
© Reuters.  Steel dropped due to concerns stemming from weak China trade data
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Steel prices experienced a decline of -0.73%, settling at 46,320, primarily due to concerns stemming from weak China trade data. This overshadowed a notable increase in August imports of raw materials for steel production and efforts by state lenders to reduce mortgage rates in a bid to rejuvenate the property sector. Additionally, market chatter regarding a notice from China's National Development and Reform Commission, calling for discussions on iron ore prices with certain futures companies, contributed to the pullback. China, the world's leading steel producer, reported further drops in exports and imports for August. These declines were attributed to sluggish overseas demand and subdued consumer spending domestically. Although the decline rates were somewhat slower than expected, they continued to exert downward pressure on steel prices. 

China's finished steel exports surged to 58.79 million tonnes over the first eight months of the year, marking a remarkable 28.4% year-on-year increase. However, it's worth noting that the growth rate in the initial eight months was somewhat slower than the exceptional 31.3% recorded in the first half of the year. In August alone, China's steel exports saw a month-on-month gain of 13.3% and a substantial year-on-year rise of 34.6%, totaling 8.28 million tonnes. Meanwhile, India's finished steel exports experienced a month-on-month decline of 6.4% in August 2023, amounting to 0.480 million tonnes compared to 0.513 million tonnes in July 2023. However, on a year-on-year basis, export volumes increased by 5.7% compared to August 2022 when 0.454 million tonnes were exported. 

From a technical perspective, the market witnessed long liquidation, with a -17% drop in open interest, settling at 830 contracts. Prices experienced a decline of -340 rupees. Key support levels are expected at 46,100, with a potential test of 45,880, while resistance is likely at 46,680, and prices could target 47,040.

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