Steel price grinds higher past $600 on mixed concerns surrounding China

• Steel price remains firmer near one-month high, sidelined near daily top of late.
• China’s Caixin Services PMI, an absence of major action surrounding Taiwan seems to favor buyers.
• Resumption of output facilities could join Fed hawks to challenge upside momentum.

Steel price lures buyers’ attention while taking rounds to the monthly high, flashed earlier in Asia. That said, the recent shift in the market’s risk appetite seems to favor the upside momentum heading into Wednesday’s European session.

With this in mind, the construction steel rebar on the Shanghai Futures Exchange (SFE) rose 1.7% around 4,130 yuan per metric tonne ($615) while the hot-rolled coil climbed 1.8% and stainless steel gained 0.2%, per Reuters.

The US-China tussles over Taiwan have been challenging the risk appetite but the recently firmer prints of China’s Caixin Services PMI for July appeared to have favored the steel buyers of late. The private services gauge from the dragon nation rose to 55.5 versus 48 expected and 54.5 prior. While portraying the mood, S&P 500 Futures rise 0.25% intraday while the US 10-year Treasury yields drop three basis points (bps) to 2.71% at the latest.

Elsewhere, the Fed policymakers have flashed mixed signals while keeping the 0.50% rate hike for September on the table.

It should be noted that the recent increase in the steel companies’ profits has acquired more attention and pushed the manufacturers to restart the previously halt output facilities. In this regard, Reuters reported that a total of 23 blast furnaces in China resumed production between July 21 and Aug. 1, according to metals industry information provider SMM, among dozens of such facilities idled for maintenance amid weak domestic steel demand.

Looking forward, updates surrounding Taiwan and Chinese mills seem to direct short-term steel price moves. Also important will be the US Factory Orders for June and ISM Services PMI for July.