Steel prices experienced a slight increase of 0.22% to reach 46,280. This rise was supported by unexpected growth in factory activity in China, a major consumer of metals, and the U.S. House of Representatives' approval to suspend the debt ceiling. China's Caixin/S&P Global manufacturing purchasing managers' index (PMI) increased to 50.9 in May, indicating a return to growth after a contraction in the official PMI. However, China's economic recovery has been slower than anticipated, evident from a contraction in manufacturing activity in April, a decline in imports, and sluggish industrial production growth. Property investment in China's construction sector also plummeted by 16.2%, reflecting low demand for new housing.
Meanwhile, the Indian Steel Association (ISA) predicts that India's steel consumption will grow during the fiscal year ending in March 2024 due to increased demand from the construction, railway, and capital goods sectors. The ISA statement suggests that India's robust economic expansion, along with the automobile and consumer durables sectors, will contribute to the rising demand for steel. In contrast, China's crude steel production in April decreased by 1.5% compared to the previous year, according to the National Bureau of Statistics.
Looking ahead, the World Steel Association (WSA) expects global steel demand to grow by 1.7% in 2024 following a projected 2.3% rebound this year, primarily driven by a recovery in manufacturing activity.
From a technical standpoint, the market is currently experiencing short covering, with a drop in open interest by 6.13% to settle at 1,530. Steel is finding support at 46,140 and could potentially test the 46,000 level. On the other hand, resistance is anticipated at 46,460, and a move above this level may lead to prices testing 46,640.
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