Steel yesterday
settled down by -0.9% at 46000 as markets continued to fret about China’s
disappointing economic recovery, pressing demand for ferrous metals. The
Chinese government displayed a solid extent of reluctance to grant stimulus to
its essential property sector, spurring bets that the country may be attempting
to prioritize its service sector and driving Goldman Sachs (NYSE:GS) and S&P to cut the
country’s GDP forecasts. Previous calls for stimulus emerged after a batch of
weak economic data from the world’s second-largest economy, reflecting poor
demand for steel-intensive construction and infrastructure sectors. New yuan
loans totaled CNY 1.36 trillion in May, well below market expectations of CNY
1.6 trillion, while industrial production slowed more than expected and imports
contracted for a third month.
India’s steel purchase from China touched one of the
highest in recent times for April-May, with 0.23 million tonnes (mt) coming in.
This is up 62 per cent YoY, per provisional data available with the Union Steel
Ministry. Finished steel shipments from China in April-May of 2022 was 0.14 mt;
while that in the same period of 2021 was 0.12 mt. China’s increased production
capacity and the downward trend in global steel prices have led to a surge in
the influx of lower-priced shipments into India. Goldman Sachs analysts have
cut forecasts for China's economic growth, citing persistently weak confidence
and the cloud over the property market as stronger-than-expected headwinds. The
U.S. investment bank lowered its full-year real gross domestic product growth
forecast for the world's second biggest economy from 6% to 5.4%, according to a
note published. It also lowered its 2024 growth forecast from 4.6% to
4.5%.
Technically market is under long liquidation as the
market has witnessed a drop in open interest by -1.03% to settle at 1930 while
prices are down -420 rupees, now Steel is getting support at 45710 and below
same could see a test of 45430 levels, and resistance is now likely to be seen
at 46520, a move above could see prices testing 47050.