- Steel prices have taken a hit on monsoon arrival and the return of lockdown worries in China.
- Back-to-back resurgence in Covid-19 in China has dented the steel prices.
- Next week’s US CPI figures will be crucial for steel and base metals.
Steel prices are declining firmly as more downside catalysts are adding to the surrendered production by steel mill owners in China. Along with the finished steel, raw materials that inculcate coke and steel scrap have dropped significantly. Thanks to the slump in the demand due to traditional off-season and growing lockdown worries in China.
The monsoon has arrived in 14 provinces of China and some parts of Asia. This has forced the public and private sectors to halt the construction and infrastructure development process. The postponement of the construction activities has resulted in a significant drop in the demand for steel and other base metals too.
Apart from that, the Chinese economy is facing the headwinds of a resurgence of Covid-19 after growing figures of Covid-19 cases. The Chinese administration has ordered mass testing and the observation of the pandemic-affected rates is indicating that the adaptation of lockdown measures is imminent.
The restrictions on the movement of the men, materials, and machines will reduce the production activities and henceforth the demand for steel. No doubt, the market participants are discounting these catalysts now and steel prices are facing severe heat.
Next week, the release of the US Consumer Price Index (CPI) will be significant for steel prices. A higher US inflation figure will compel the Federal Reserve (Fed) to tighten its policy further. This may result in a slump in the aggregate demand by the global economy.