Steel price remains pressured at six-week low on China woes, focus on US employment data

• Steel price holds lower ground at the lowest levels late July, sluggish of late.
• China’s covid woes, Sino-American tussles supersede stimulus hopes.
• Market sentiment remains downbeat amid hawkish Fed bets, recession woes.
• US NFP will be crucial for fresh impulse amid mixed mood.

Steel price stays pressured around the lowest levels in six weeks as fears of central bank aggression join China-linked pessimism. That said, pre-NFP trading lull restricts the metal’s immediate moves.

While portraying the mood of steel traders, Rebar prices on the Shanghai Futures Exchange (SFE) fell 1%, while hot-rolled coil shed 0.6%. Stainless steel slipped 0.4%.

A covid-led lockdown in China’s Chengdu city joins downbeat Caixin Manufacturing PMI to portray grim conditions for the world’s second-largest economy and weigh on the sentiment. On the same line could be the escalating geopolitical tension between Beijing and Washington, via Taiwan. Furthermore, Reuters unveiled news suggesting that US President Joe Biden's curbs on chips to China are part of a broader effort.

On the same line could be the news from Reuters stating, “Nearly 70 Chinese cities, meanwhile, reported declines in new home prices last month, the most since the start of the pandemic, putting more pressure on local governments to quickly roll out additional support measures for homebuyers and developers.”

Elsewhere, firmer US data and hawkish Fedspeak joined pessimism surrounding China to underpin the US Treasury yields’ run-up, which in turn favored the US Dollar Index (DXY) to rise to the highest levels since 2002 and exert downside pressure on steel price.

Looking forward, market players will keep their eyes on the US Nonfarm Payrolls (NFP) and Unemployment Rate for August, expected 300K and 3.5% versus 528K and 3.5% respective priors, for fresh impulse amid mounting calls of recession and central bank aggression. “Though steel prices could see some support during what is traditionally a peak demand season between September and October, when construction activity picks up in China ahead of winter, analysts said there is limited room for any upside,” per Reuters.