Steel yesterday
settled up by 0.24% at 45640 as renewed hopes of economic support from China’s
government offset alarming signs over the health of the country’s economy and
resource demand. Following a cabinet meeting, policymakers stated that the
government would continue to pass measures to boost consumption and investment
in the steel-intensive property sector. The move was done after major
developers missed bond payments and investment firms skipped on securities
coupon payouts, magnifying deflationary concerns for real estate and a batch of
weak macroeconomic data in the Chinese economy. Besides efforts to stimulate
consumption, the outlook of lower construction demand drove the Chinese
government to significantly lower the production outlook for 2023, resulting in
activity halts for key mill hubs.
China produced 90.8 million metric tons of crude steel in July,
up 11.5% from the same period a year earlier, the statistics bureau said. The
July volume was slightly lower than 91.11 million metric tons in June, data
from the National Bureau of Statistics showed. The world's largest steel
producer manufactured 626.51 million tons of the ferrous metal in the first
seven months of the year, up 2.5% from the same period a year before, NBS data
showed. The People’s Bank of China (PBoC) unexpectedly slashed the one-year
medium-term lending facility (MLF) rates by 15 bps to 2.50% on August 15th as
it seeks to help an economy that faces risks from a deepening property crisis
and weak consumer spending. China's new home prices fell for the first time
this year in July, official data showed, as piecemeal policy support failed to
shore up the embattled property sector, heaping pressure on authorities to
introduce bolder stimulus.
Technically market is under short covering as the market has
witnessed a drop in open interest by -7.39% to settle at 1630 while prices are
up 110 rupees, now Steel is getting support at 45510 and below same could see a
test of 45390 levels, and resistance is now likely to be seen at 45750, a move
above could see prices testing 45870.