Steel prices in a downward pull
by David Fleschen
Like copper at SHFE in Shanghai and iron ore at DCE in Dalian, the price of reinforcing steel in China fell sharply yesterday. After the markets reopened after the extended New Year break, the most traded futures contract fell by 8%. It recorded the largest possible daily loss and fell to its lowest level since December 2018. In evening trading, it made up for a small part of its losses. Interestingly, the not very liquid futures contract for reinforcing steel on the LME in London has seen manageable losses in the past few days. In general, there are concerns among market participants that the corona virus stifles economic activity in China and thus also negatively affects steel demand. Many factories in the country are currently closed and some workers may be late for work. The Association of European Steel Manufacturers (Eurofer) last week lowered its outlook for this year's steel demand in the EU by two tenths to + 1.2%. However, he attributes this to a weaker than expected basis of comparison last year. Eurofer continues to regard the trade disputes emanating from the USA as the greatest risk factors and the existing uncertainty regarding the Brexit planned for the end of the year. The assumed recovery in steel demand should only take place in the second half of the year. In 2021, steel demand in the EU could rise somewhat more strongly by 2.3%.
Source: Commerzbank Reseach, Photo: Fotolia