Steel prices experienced a
-0.72% decline, settling at 46860, as market concerns focused on the risk of
financial turmoil in China's major property sector. The recent missed payments
by Country Garden raised apprehensions about the financial stability of
prominent Chinese property developers. However, the steel market remained
resilient due to robust infrastructure demand and reduced supply. Despite the
property sector worries, China's resource demand outlook was positive,
supported by Beijing's economic support measures to counteract the slowdown in
housing demand. JPMorgan (NYSE:JPM) noted that ongoing
infrastructure projects in China would sustain steel usage, countering reduced
confidence in residential sales.
Furthermore, data revealed a more
substantial-than-expected 4.8% monthly drop in China's crude steel production
for August, which also provided support to steel prices. In August, China's
crude steel output declined by 4.8% compared to the previous month, reflecting
some steel mills' production cutbacks amid shrinking profit margins. However,
the nation's steel production increased by 3.2% year-on-year. India's finished
steel exports decreased by 6.4% month-on-month in August but rose by 5.7%
year-on-year. Notably, India's steel imports from China reached a five-year
high from April to July, with China becoming the second-largest steel exporter
to India during that period.
Technically, the steel market saw long liquidation,
with a -6.7% drop in open interest and prices declining by -340 rupees. Steel
currently finds support at 46710, with potential testing of 46570. Resistance
is expected at 47030, with the possibility of prices reaching 47210.