China: Important course decisions expected
China: Important course decisions expected

18 July 2023 – The Chinese Politburo’s decisions for the second half of 2023 are eagerly awaited, especially about interest rate developments. Commodity prices in Asia continue to be friendly. And scrap in parts of Asia scarce, pig iron demand therefore picks up. US HRC prices stabilize.

China: Important course decisions expected 

Deutsche Bank analysts expect the Chinese Politburo meeting at the end of July to set an important course for the second half of the year. Among other things, interest rate cuts to stimulate private credit and investment growth could be decided.  

Credit moratorium helps real estate developers 

After the recently adopted credit moratorium until the end of 2024 should noticeably ease the liquidity problems of some real estate developers and push the completion of outstanding projects, additional easing of purchase restrictions and down payment conditions for residential properties could follow. If Beijing succeeds in strengthening the important real estate market, this could not only boost growth overall but also ensure a sustained improvement in investor sentiment on China’s stock and bond markets. 

Commodity prices in Asia continue to be friendly and rising 

Commodity prices in Asia continue to show friendly and rising. For the SHFE futures, HRC is up about 0.5% today, iron ore is up about 0.36% and stainless steel is up 0.64%. Due to the heat wave in China, the demand for electricity is increasing, which makes coking coal (+3.9%) and coke (+2.31%) prices rise significantly. 

Scrap in short supply, pig iron in demand  

According to recent media reports, the scarce availability of scrap is forcing Taiwanese steelmakers to rely more on the use and procurement of pig iron. And Turkey is also reporting significantly higher demand for pig iron for January to May 2023. In addition, US HRC prices have stabilized at around $990/MT. 

Asian high-grade iron ore prices continue to show very high levels and above the mid-2021 peak due to strong demand and after a short correction from their all-time high a few days ago. 

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