Steel Price fades upside momentum around $650 on covid, recession woes

• Steel Price seesaw around intraday high holds onto recovery moves from yearly low.
• US dollar pullback joins China’s readiness to spend more to underpin corrective pullback.
• Jump in Shanghai covid numbers, inverted yield curve exert downside pressure.
• US employment numbers will be crucial after the Fed showed readiness for higher rates.

Steel Price benefits from the US dollar’s pullback from a multi-year high as it seesaws around the intraday high during early Thursday morning in Europe. However, fears of global economic slowdown join fears of another covid lockdown wave to challenge the bulls.

That said, prices of the most active Steel rebar contract on the Shanghai Futures Exchange (SFE) take rounds to 4,255 yuan metric tonne ($650.00) by the press time.

It should be noted that the chatters surrounding China’s 500 billion yuan infrastructure plan and measures to increase vehicle consumption underpinned the metal’s rebound the previous day.

Shanghai recently reported a big jump in the daily covid cases to 32 locally transmitted confirmed cases. The same propels lockdown fears, previously propelled by China’s order of mass testing. Also positive were previous supply chain disturbances, mainly in Chile, as well as improvements in steel materials.

On a broader front, the yield curve inversion, a condition where near-term bond yields are higher than the longer-dated ones, appears to highlight the recession fears. That said, the 2-year bond coupon retreats to 2.96% while showing the inverse gap with the 10-year yields and hints at the global recession. On the same line, International Monetary Fund (IMF) Managing Director Kristalina Georgieva also said, per Reuters, “Global economic outlook has 'darkened significantly' since last economic update.” the IMF chief also added, “Cannot rule out the possible global recession in 2023.”

Additionally, the fears of oversupply, mainly due to a jump in the Asian steel inventories and higher production in the Asia-Pacific region, also exert downside pressure on the metal.

Moving on, Steel Price may remain pressured amid global slowdown fears, as well as an imbalance of the demand-supply crunch. The metal can witness further downside if China’s covid-led lockdown returns, also if the US employment data manage to print upbeat figures.