Steel: From Alchemy to Deflation

China’s steel product prices have started declining based on weaker fundamental demand, after a surprising rally driven by excess PBOC-generated liquidity in China’s financial system. Inventories are at record high levels while the recovery in demand from manufacturers, property and infrastructure construction has remained slow after the coronavirus outbreak. These dynamics should push steel, iron ore, and related commodity prices lower this year, deepening deflationary pressure in producer prices in 2020.

Posted May 4, 2020
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