Steel yesterday settled up
by 0.47% at 44440 as markets assessed the impact of the latest economic data on
the Chinese government’s decision to pass stimulus measures. Official PMI
figures pointed to a fourth consecutive contraction in China’s factory
activity, strengthening the case for Beijing to step in and stimulate sectors
with high-resource demands. Previously, the country's Politburo pledged it will
pass measures to combat cyclical slowdowns and boost real-estate consumption to
support debt-ridden property developers that are critical to the Chinese
economy, but fell short of announcing large-scale stimulus as the country’s
recovery fails to gain traction.
Steel demand in the European Union is expected to slide
3% this year amid persistently high energy prices and sluggish demand, the
European Steel Association (Eurofer) said, downgrading its outlook. In May, the
industry group said steel consumption was due to decline by 1% in 2023, but
lingering uncertainty meant that the prospects for this year have deteriorated,
a statement said. The EU steel sector produces about 152 million metric tons of
steel per year at about 500 sites with turnover of 130 billion euros ($144.04
billion).
China's June crude steel output rose 1.1% from May and
0.4% from a year earlier, the statistics bureau said, as mills were encouraged
to ramp up production after steel prices rose. The world's largest steel
producer manufactured 91.11 million metric tons of the ferrous metal last
month, data from the National Bureau of Statistics (NBS) showed, higher than
90.12 million metric tons manufactured in May and 90.73 million metric tons in
the same month in 2022. India's finished steel purchases from China touched a
six-year high in the first two months of the fiscal year beginning in April,
according to provisional government data, while its overall imports reached a
three-year high.
Technically market is under short covering as
the market has witnessed a drop in open interest by -13.96% to settle at 2280
while prices are up 210 rupees, now Steel is getting support at 44230 and below
same could see a test of 44020 levels, and resistance is now likely to be seen
at 44570, a move above could see prices testing 44700.