The Purchasing Managers’ Index (PMI) for China’s steel industry remained unchanged on month at 46 in January, the official index compiler CFLP Steel Logistics Professional Committee (CSLPC) disclosed in its latest release on January 31. However, the committee pointed out that domestic steel demand shrank this month, steel production eased, mills’ stocks mounted, the upward momentum of raw materials prices slowed, and finished steel prices declined moderately.
During January, China’s sub-index of new steel orders edged up 0.8 percentage point on month to 43.8, though still at a low level and below 45 for the second month. End-users saw their construction activities slow with the low temperatures in most regions across the country and the Chinese New Year holiday approaching. Also, steel traders have been gradually leaving the market to get a head start on CNY celebrations, according to CSLPC.
Meanwhile, the index of new steel export orders grew for the second month, rising by 2.4 percentage points on month to 51.1 in January, showing that Chinese steel exports are stabilizing, CSLPC notes.
As for China’s steel production this month, the sub-index fell for a second month, down 2.1 percentage points on month at 43.7, as steelmakers were not keen about cranking up output when demand from end-users was weak and with the holiday break approaching, the committee said.
Finished steel stocks held by Chinese mills accumulated at a fast pace, the committee said, quoting data from the China Iron and Steel Association (CISA), with the tonnage at CISA’s member mills climbing to 15.4 million tonnes as of January 20, higher by 6.7% from January 10.
The sub-index of procurement prices for steelmaking raw materials slumped by 18.7 percentage points on month to 57.8 in January, as the procurement of raw materials declined due to the tightening of steel production and demand, according to the committee.
As for February, domestic steel demand may continue to ease and mills’ production may fall further, CSLPC suggested. It also expected that raw materials prices would trend downward and domestic steel prices may mildly fluctuate.