- Steel price remains mildly positive even as US dollar rebounds, risk dwindles.
- Chinese city of Zhengzhou said it would start building stalled housing projects.
- Covid fears, US-China tussles over Taiwan join pre-ECB, Powell sluggish move test metal buyers.
Steel price remain on the front foot despite sluggish sentiment as headlines from housing markets in China appear promising amid early Thursday morning in Europe. Also likely to have favored the metal buyers could be the recent lackluster moves of the US dollar, after refreshing the multi-year high.
Retures mentioned three sources with knowledge of the matter while saying, “Zhengzhou vowed to start building all stalled housing projects within 30 days, by making good use of special loans, asking developers to return misappropriated funds, and encouraging some real estate firms to file for bankruptcy.”
The news also states that Homebuyers in at least 80 cities in China have threatened to halt making mortgage payments as liquidity problems or COVID-19 restrictions hampered projects, adding to worries about an ailing property market.
It should be noted that Steel rebar on the Shanghai Futures Exchange (SFE) rose 1.6%, while hot-rolled coil climbed 1.1%. Further, the prices of stainless steel gained 1.8% by the press time.
US Dollar Index (DXY) retreats to 109.70 but stays mildly bid while reversing the previous day’s pullback from a two-decade top. In doing so, the greenback gauge faces hurdles due to the US 10-year Treasury yields which extend Wednesday’s pullback from the highest levels since mid-June to 3.23%.
The risk-negative headlines concerning China exert downside pressure on steel prices. That said, the South China Morning Post (SCMP) mentioned previously, “Shenzhen reduces entry quota for Hong Kong travelers.” Following that, Reuters’ news that Taiwan and the US are bracing for stronger ties also weighs on the sentiment. On the other hand, Reuters mentioned, “Chengdu, capital of the southwestern Chinese province of Sichuan, extended the lockdown of most of its districts on Thursday.”
Looking forward, the art of Fed Chair Powell’s defense of the aggressive rate hikes will be at test during today’s speech, especially due to the hawkish hopes from the ECB. Ahead of that, the ECB’s ability to please the policy hawks will be important to watch as there still prevails indecision between 50 bps and 75 bps move.
