Steel demand17 May 2023 12:36
From IG- steel demand soft in China - explains the V price drift - US market not affected as much I would think
More China Headwinds For Miners (1115 Gmt)
China's reopening may have been a boon for luxury goods makers but its recovery has been all but even. European-listed miners in fact haven't got much out of it mostly, because of ongoing troubles across the real estate sector.
And recent macro data out of the world's No.2 economy highlight the risks for European miners, which makes RBC analysts pretty cautious on the sector going forward.
"Although completions have helped to support activity, new starts have pulled back significantly and are now at the lowest level since 2009. As the under construction inventory fades, there is risk that steel consumption for real estate is materially lower than expectations," they write.
On the positive side, RBC says the sector is largely back to fair value. Yet it anticipates volatility in iron ore prices as markets might turn their hopes to bigger stimulus potentially fuelling a "bad-is-good" dynamic.
That being said, RBC sees risks tilted to the downside.
The "underlying increase in the consumption side of the economy is what policymakers want, which may leave fixed asset stimulus expectations lagging," they say. "Any incremental stimulus will take time to work through, and we fear will not offset the eventual lower construction levels from the lower pipeline of new starts already in the books".
The STOXX Europe 600 Basic Resources is down 13% so far in 2023, a 22 percentage point underperformance relative to the broader market , as you can see in the chart below.
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