Based on recent stock market figures, the Chinese stock market is facing quite a downturn. However, steel prices are still on the rise. Many market analysts say that this is a positive sign that shows just how resilient the world's second-largest economy is.
Stock investors both in China and around the globe are worrying that the continual depreciation of the Chinese market is a sign of the country's slowing economic growth. This can be traced back to Beijing's decision to reduce the country's reliance on debt. The bitter trade war between China and the United States is also being fingered as one of the culprits.
On one hand, head of Greater China Economics at Macquarie Larry Hu said that the rise in terms of steel prices is what really reflects the current state of China's economy. On the other hand, stock market prices are what represents market sentiment based on the country's growth outlook.
In terms of steel prices, China's Nanhua rebar steel futures index posted a growth of 22 percent this year. This is a significant increase compared to Shanghai's composite which posted a 16 percent decline.
The steel industry is still being closely watched by many market analysts as it stands to be a significant part of the country's overall economy. Moreover, China is slowly transitioning from a country that relies on the manufacturing industry into an economy driven mainly by consumption.
A closer look at the Chinese steel market, industry giant Baosteel recently announced that the company has posted a 62.2 percent year-to-year growth in the first half of the year. This growth translates to 10.01 billion Yuan or $1.47 billion.
Baosteel, officially called Baoshan Iron and Steel, highlighted in its recent report that it is expecting that the steel industry will greatly benefit should the Chinese economy stabilize in the remaining half of the year. The company did show its anxiety regarding the growing risks looming around trade protectionism.
However, despite the mostly positive signs of economic growth driven mainly by the steel industry, recent figures reveal a slower growth in terms of the overall economy.
The People's Bank of China recently announced that it will impose new regulations in order to stabilize the Yuan. This announcement caused the Shanghai composite to grow by as much as 1.5 percent.
