Steel buyers keep reins during early Monday in Europe, despite a lackluster start to the week, as fears of supply crunch join cautious optimism surrounding the global economic rebound.
That said, steel rebar prices on the Shanghai Futures Exchange (SFE), as well as the most active steel contract on the London Metal Exchange (LME), both print over 2.0% intraday gains by the press time.
In doing so, the metals cheer the broad weakness of the US dollar, as well as hopes that the Chinese government will announce more stimulus to defend the metal industry, as well as the world’s second-largest economy to slip into the recession. Also keeping the metal prices firmer are the recent output restrictions, due to the covid and the emission-linked stipulations.
The supply-crunch fears have regained momentum after multiple days of inactivity on the production front joining recent hopes that the global central bankers will be able to renew growth.
On the other hand, fresh geopolitical and trade headlines surrounding China and Russia appear to probe the metal buyers. On the same line could be the hawkish outlook of the Fed policymakers, as well as the doubts over China’s stimulus. Recently, headlines suggesting US President Joe Biden’s readiness to hit China with broader curbs on US chip and tool exports seemed to have tested the metal buyers.
It’s worth noting that a fortnight-long blackout of the Fed policymakers and a light calendar ahead of the US consumer-centric data, including the key inflation readings, seem to favor the steel buyers of late.
In addition to the US and China Consumer Price Index (CPI), the Retail Sales for August, as well as the preliminary readings of the Michigan Consumer Sentiment Index for September, will also be important for fresh impulse.
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