What's moving metal prices and what to expect this week?

Base metals prices pulled back from higher levels, but prices remain cushioned by hopes of fast track measures from Chinese government. According to a China Securities Journal report released on June 19th, citing analysts and unidentified market sources, further fiscal, monetary and industry policy stimulus can be expected to support the Chinese economy, boosting consumption and investment demand.

Steel prices corrected for the ninth consecutive week ending June 16th. Long steel, which witnessed a pre-monsoon procurement last week, has come under pressure with prices correcting to October 2021 levels. Ex-Mumbai benchmark primary long steel prices corrected Rs 900/t to settle at Rs 53,500/t. The prices of long steel products was dragged by weak global housing and infrastructure demand.

Flat steel prices that witnessed a slight uptick last week were relatively flat week on week at Rs 55,400/t. The domestic trade-level prices have inched up however, range-bound export prices have kept the overall prices under

check.

Gold prices held steady on Tuesday, after moving in a tight range in holiday-thinned trading. Although gold is considered a hedge against inflation, interest rate hikes raise the opportunity cost of holding non-yielding bullion. Among other precious metals, spot silver eased to $24 per ounce and palladium fell 1.2 percent to $1,390.

After softer inflation and disappointing trade figures from China, factory output and retail sales too missed expectations, adding to evidence that the world’s second-largest economy cooled further in May. This sparked hopes that the People’s Bank of China might need to cut interests’ rate soon to support a sustained economic recovery. Investors are hopeful of more economic stimulus measures from China as the latest economic data releases hinted towards an economic slowdown.

This week, speeches by several FOMC officials and most Fed Chair Powell testimony will be in focus for more hints on the policy outlook, which may bring volatility in metal prices.

The metals pack gains in trade on June 20th with Jindal Steel rising 4 percent, NMDC, JSW Steel and Jindal Stainless rising upto 2 percent at 10:45 am on June 20th. At least 12 out of 15 stocks of Nifty Metal index trade in the green and is the only sectoral index along with consumer durables rising in trade.