Steel Price ignores China-linked catalysts to stay depressed at yearly low, recession, US data eyed

• Steel Price drops near 5.0% on a day to refresh YTD low amid pessimism surrounding global growth.
• China released softer Q2 GDP, marked contraction in crude steel output for June.
• Bad weather, covid joins doubts over Chinese stimulus to renew growth optimism to weigh on metal prices.

Steel Price remains on the back foot around 2022 bottom as metal traders fail to cheer the US dollar pullback, as well as a reduction in Chinese output amid fears of economic slowdown. That said, steel rebar prices on Shanghai Futures Exchange (SFE) remain pressured near 3,680 yuan per tonne ($545), down around 5.0% by the press time of early Friday morning in Europe.

China’s Q2 Gross Domestic Product (GDP) shrank more than -1.5% expected to -2.6% QoQ, versus 1.4% prior. Further, the Industrial Production also eased but Retail Sales improved in June.

On the other hand, Reuters came out with the news saying that China's crude steel output fell 3.3% in June compared with a year earlier, and was down 6% from May.

The news also mentioned, “Several mills in China have idled blast furnaces or placed them under maintenance earlier than usual due to weak margins and high inventories, and it remains uncertain when these facilities will be restarted.” It’s worth noting that covid-led lockdowns and bad weather recently affected Chinese metal producers. The output was also reduced as manufacturers had little motivation with downbeat prices.

Elsewhere, the reduction in the hawkish Fed bets and easing of the inversion gap of the key US Treasury yield curves, namely between 2-year and 10-year bonds, appears to have favored the market sentiment amid Fed policymakers’ attempt to talk down a 100 bps rate hike.

Moving on, US Retail Sales, expected 0.8% MoM in June from -0.3% marked in May, will precede preliminary readings of the Michigan Consumer Sentiment Index (CSI) for July, expected 49.9 versus 50.0 prior, to direct intraday moves of the USD/INR. Also important will be the Fedspeak and updates from the meeting of the Group of 20 key nations (G20) in Indonesia.

Also read: US June Retail Sales Preview: Has the consumer turning point arrived?