Fed Expects Rising Inflation; Chinese Steel Capacity Still High

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Fed watchers are predicting higher price inflation along with the central bank, itself, and China is still struggling to shut down its unprofitable steel capacity despite government coercion to do just that.

Inflation Rises, Traders Predict More Increases

Consumer prices — excluding food and energy — rose 2.3% in February compared with a year earlier, and market inflation expectations are finally aligning with the Federal Reserve‘s, traders say.

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“The market definitely has the view that if indeed we do experience a higher run rate of inflation, the Fed has the tools to deal with it,” Martin Hegarty of BlackRock told Bloomberg News.

China Hasn’t Cut Steel Capacity Enough

China’s total crude steel capacity currently stands at 1.13 billion metric tons, Reuters reported, and the country needs to step up efforts to shut down poorly performing mills, a government official said on Saturday.

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In February, China announced plans to shut 100 million to 150 million mt of crude steel capacity in the next five years, as it tackles a price-sapping glut that has caused turmoil in the industry.

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