Steel price grinds higher during the early Friday as metal buyers struggle amid mixed concerns. Even so, the industrial metal braces for the fourth consecutive weekly gain as recently softer US dollar and increased prices of iron ore favor commodity bulls.
That said, steel rebar futures on the Shanghai Futures Exchange rise 0.9%, while hot-rolled coil climbs 0.6% heading into the European session.
On the other hand, Reuters mentioned that the most-traded iron ore contract, for delivery in January next year, on China's Dalian Commodity Exchange dropped as much as 2.5% to 716 yuan ($106.16) a tonne. The contract, however, was still on track for a weekly gain of more than 1% driven by a rebound in margins at mills.
China’s decarbonization goals and a sector-wide consolidation plan to eliminate overcapacity have been the major catalysts for controlling the steel output in the dragon nation.
Elsewhere, US President Joe Biden’s pause in announcing tariff relaxations to China, actually the removal of the Trump-era tariffs, gained major attention and renewed the Sino-US tussles to weigh on the market sentiment, as well as weigh on the steel price. Additionally, a jump in the coronavirus cases from China and Taiwan’s criticism of the “One China” policy, as well as US House Speaker Nancy Pelosi’s support for Taipei, act as an extra burden on the metal prices.
On a broader front, the recently easy US Consumer Price Index (CPI) and Producer Price Index (PPI) data eased the market’s fears of the Fed’s heavy rate hikes. However, the recently hawkish comments from the policymakers have been challenging the optimism amid a light calendar.
Looking forward, the US Michigan Consumer Sentiment Index (CSI) for August, expected at 52.5 versus 51.5 prior, will be important for fresh impulse.
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