Steel prices saw a modest increase of 0.4%, closing at 45,660, driven by short covering. Prices had recently dropped due to concerns over potential financial contagion in China's steel-intensive property development sector. The possibility of liquidation for Evergrande, following another missed bond payment, and the debt restructuring efforts of Country Garden raised fears of defaults and halted activity in numerous construction projects, affecting steel demand from a major source. Global crude steel production in August exhibited a 2.2% year-on-year increase, reaching 152.6 million tonnes, according to World Steel Association data.
China, the world's largest steel producer and consumer, produced 86.4 million tonnes of crude steel in August, marking a 3.2% year-on-year rise. However, China's crude steel output experienced a 4.8% decline in August compared to the previous month, attributed to some steel mills reducing production amid shrinking margins. The National Bureau of Statistics reported that China's average daily steel output in August was 2.79 million tons, down from 2.93 million tons in July but higher than the 2.71 million tons recorded in August 2022. In terms of India, finished steel exports declined by 6.4% month-on-month to 0.480 million tonnes in August 2023, though they increased by 5.7% year-on-year compared to August 2022.
From a technical perspective, the market underwent short covering, with open interest decreasing by -3.38% to settle at 1,430. Steel's prices increased by 180 rupees. Currently, the commodity has support at 45,430, with potential to test 45,190 if it falls below. On the upside, resistance is expected at 45,800, and a move above that level could push prices to test 45,930.