- Steel prices eye some recovery as demand for automobiles to
escalate.
- Demand for automobiles remained upbeat in
June and a similar performance is expected in July.
- Construction activities to resume as monsoon
may be concluded sooner.
Steel prices are eyeing a
rebound after remaining in a bearish grip for the past few months. Pessimism
about the steel prices is getting exhausted now and steel mill owners are
returning to their production units. Earlier, steel producers halted production
processes as margins were squeezed amid a significant slippage in steel prices.
To boost domestic steel
production, China’s Commerce Ministry will extend anti-dumping duties on
grain-oriented flat-rolled electrical steel imported from Japan, South Korea,
and the EU for five years from July 23. This will boost China's steel mill
owners to fire-up production capacities.
Now, steel prices are finding
a cushion, and steel mill owners have chosen to resume production to cater to
the likely growing needs. Automobile production is enlarging in China as
China's Association of Automobile Manufacturers (CAAM) has reported a
significant increase in sales data in June.
The demand for passenger cars
has grown 36.9% on a monthly basis and 23.8% on an annual basis. Also,
the demand for commercial vehicles has grown 17.4% on QoQ but fell 37.4% on
yoy. Going forward, the demand is expected to escalate further as zero-Covid
policy implementation by the Chinese government will force them to keep
themselves isolated from others.
Apart from that infrastructure
projects are gearing up again after the conclusion of monsoon in various
provinces of China. Earlier, heavy rains in various parts of China forced
postpone of construction activities. Now, infrastructure projects and real
estate will start picking up pace and eventually, the demand for steel.
Investors should be aware of the fact that global recession worries will remain
stable as western central banks are ready for a fresh leg of interest rate
elevation to barricade price pressures.