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Steel prices fall due to weakening European demand and problems in China

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New cases of coronavirus in China and falling iron ore prices amid "nearly zero" demand for steel beams in Europe are putting pressure on global steel prices.

Steel prices fall due to weakening European demand and problems in China

The price of steel continues to fall after clear signals of a mismatch between supply and demand appeared in China and Europe amid fears of a recession. At the same time, the EU markets show “almost zero” demand for steel beams.

Construction steel rebar on the Shanghai Futures Exchange (SFE) fell more than 3.0% to 4,181 yuan per metric ton, while hot-rolled coil fell about 3.5% and stainless steel fell 0. 9% according to data published by Reuters. New drop ignores US dollar pullback from two-week high.

Many factories in both Europe and China are cutting production due to summer holidays, low demand and high energy costs.

It is worth noting that fears of a recession intensified after the ISM manufacturing PMI for June, published on Friday. The US ISM Manufacturing PMI for June fell to its lowest level in two years, to 53.0 from 54.9 and 56.1 previously expected.

Given the data, ANZ Bank analysts said: “Survey data from both the US PMI and ISM point to unsustainable growth in orders, lower backlogs and lower summer production. It is hard to avoid growing growth pessimism, which is also inflating expectations of a peak in both inflation and central bank militancy.”

In addition, the new restrictions on activities due to the coronavirus in the Chinese province of Anhui join Russia's claim of full control over Lisichansk, which also affects the price of steel.

On Monday, iron ore fell more than 6.0% to 716 yuan (approximately $107) a ton on China's Dalian Commodity Exchange.

It should be noted that the increase in exports of metals from Australia and Brazil also affects steel inventories and forces investors to bet on the fall in anticipation of the key events of this week, namely the minutes of the Federal Open Market Committee (FOMC) and the US employment report for June.

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