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Steel gains despite continuous concerns in China

Published 16-08-2023, 02:00 pm
© Reuters.  Steel gains despite continuous concerns in China

Steel yesterday settled up by 0.18% at 44990 despite continuous concerns over resource demand in the Chinese economy. Sentiment on the steel-intensive construction sector deteriorated further after Country Garden suspended trading for its bonds, magnifying the debt crisis for key market players and hampering the resource demand outlook for the major steel consumer. The developments added to stress as a batch of economic data shows evidence that China’s economy struggles to recover. After manufacturing PMIs and trade turnover both disappointed expectations in July, new data showed that new yuan loans and social financing growth were less than half of expectations in the period. 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.

China's imports of iron ore in July slipped 2% from the previous month, customs data showed, as sintering curbs in major steel production hub Tangshan dampened demand for the key steelmaking ingredient. The world's largest iron ore consumer brought in 93.48 million metric tons of iron ore in July, up 2.5% from the same month a year earlier, data from the country's General Administration of Customs showed. China's exports of steel products in July grew 9.6% from the previous year to 7.31 million metric tons, extending a decline to two consecutive months, data showed. The country shipped 50.89 million metric tons of steel products in the first seven months of the year, a 27.9% year-on-year rise, according to customs. China imported 678,000 million metric tons of steel products last month, down from 790,000 metric tons in July 2022, with the January to July total at 4.42 million metric tons, a 32.6% decline on the year. 

Technically market is under short covering as the market has witnessed a drop in open interest by -6.76% to settle at 2070 while prices are up 80 rupees, now Steel is getting support at 44720 and below same could see a test of 44460 levels, and resistance is now likely to be seen at 45120, a move above could see prices testing 45260.

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