Posted on 19 Jul 2023
China's futures markets including those for steel, iron ore, coke and coking coal all showed new vigour on Tuesday after China's National Development and Reform Commission (NDRC), the country's top government planner, had vowed to unveil more economic stimulus measures soon following Monday's release of some disappointing data for June and the first half.
For example, on Tuesday the most-traded October rebar contract on the Shanghai Futures Exchange closed the daytime trading session at Yuan 3,749/tonne ($522.7/t), rebounding by Yuan 23/t from the settlement price of Monday after recording a loss of Yuan 61/t on that day.
"The NDRC will focus on stabilizing consumption of bulk commodities and promoting sales of automobiles and electronic products by introducing policies to restore and expand consumption," Jin Xiandong, director of the NDRC's Office of Policy Studies told Chinese to media on Tuesday morning.
Li Hui, another senior NDRC official also addressing the Commission's monthly press conference, stressed that the government has the confidence and ability to promote the continuous optimization of the country's economic structure "so as to achieve the annual economic and social development targets," she said.
The NDRC's pledge on Tuesday was seen by most market insiders as a quick response to Monday's key economic indicators that fell short of market expectations, and underscored the Commission's determination to rebuild confidence among citizens about China's post-pandemic economic recovery, Mysteel Global noted.
Among the data sets released by China's National Bureau of Statistics (NBS) on Monday were some indicating the country's faltering economic health. For example, China's gross domestic product posted a smaller on-quarter growth of 0.8% over the April-June quarter, compared to the 2.2% recorded during the first quarter of this year, as reported.
Also, the country's retail sales of consumer goods grew by a slower on-year pace of 3.1% in June, down from the on-year increase of 12.7% in the prior month, the NBS' data showed. The data indicated a slowdown in consumer spending, Mysteel Global noted.
Meanwhile, the statistics compiled by NBS on the property market again disappointed the ferrous market and sapped market insiders' sentiment about this year's steel consumption.
Significantly, during June the total area of China's newly-launched property projects slumped by an even larger 31.4% on a yearly basis, with the fall being much steeper than the on-year drop of 28.5% in May.
Nevertheless, the sentiment in China's ferrous market may stay positive through the remainder of July, predicted a Shanghai-based futures analyst. Market pundits are expecting that the meeting of the Political Bureau of the CPC Central Committee at the end of this month will agree on new policies to bolster the economy, something they have been looking forward to welcoming for weeks.
"But what will define steel and iron ore prices afterward may become the supply-demand fundamentals of finished steel," the Shanghai analyst said. "These will possibly deteriorate further in the weeks ahead as summer takes its toll on steel consumption," she added.
Source:Mysteel Global
