The price of steel rises somewhat despite contradictory signals from China

The price of steel continues to hover near its one-week high, which was signaled the day before. Notable is the fact that the latest comeback in metal prices is supported by promises for additional stimulus from China and the retreat of the U.S. dollar, despite the fact that recession concerns pose a challenge to bulls.

The most active steel rebar contract on the Shanghai Futures Exchange (SFE) jumped 0.50 percent, while the price of hot-rolled coil increased 1.4 percent. Moreover, stainless steel prices increased 0.4% to 15,430 yuan per tonne.

China's willingness to combat the effects of the recession with a substantial injection of funds appears to have contributed to the recent optimism among metal purchasers. "Additional measures taken by China to bolster its struggling real estate market provided additional help. Reuters reports that China slashed its benchmark lending rates and mortgage reference rates by a larger margin on Monday in an effort to stimulate its economy, which has been hampered by COVID-19 breakouts and a housing crisis.

On the other hand, Reuters reported that the longer-term situation remained uncertain as a recurrence of COVID-19 cases and a worldwide economic recession continued to weigh on steel demand.

It should be noted that the US Dollar Index (DXY) retreats from its intraday high as traders await the US Durable Goods Orders for July, which are anticipated to increase by 0.6% versus the prior increase of 2.0%, for fresh impetus. Expectations that Fed Chairman Jerome Powell will repeat his attempt to soothe hawks at Friday's speech at the Kansas City Fed's Jackson Hole conference may have also impacted on the dollar.

Aside from this, predictions of a recession in Europe, primarily owing to the energy crisis, and India's desire to become the world's leading steel manufacturer appear to exert downward pressure on the steel price.