China’s steel PMI down in Jan amid slow demand, prices to fluctuate in Feb

Monday, 01 February 2021 11:47:32 (GMT+3)   |   Shanghai

In January this year, the purchasing managers index (PMI) for the Chinese steel sector was at 44.3 percent, down 1.5 percentage points as compared to December, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP). In January, steel production increased, while demand has been slack and iron ore prices, even despite the recent decreases, are still at high levels, hurting mills’ profitability.

In January, the production index for the Chinese steel sector rose by 1.0 percentage point compared to the previous month to 48.7 percent as mills expected stock replenishment activity ahead of the Chinese New Year holiday (February 11-17).

Meanwhile, in January the sub-index for new orders in the steel sector saw a drop of 7.0 percentage points month on month to 35 percent. While the new export orders index indicated a rise of 0.8 percentage points month on month to 55.2 percent due to the improvement in overseas markets and competitive Chinese prices.

In the given month, the finished steel inventory index increased to 48.7 percent, up 15.2 percentage points month on month.

At the same time, the purchase price index of raw materials in the Chinese steel sector decreased by 3.6 percentage points month on month, to 68.5 percent, though remaining at high levels and above 68 percent for the third consecutive month.

As for February, demand for steel will rebound quickly after the long holiday, while steelmakers’ outputs will also increase, though steel prices may fluctuate within a limited range. At the same time, China’s exports of steel will continue to rise. In 2021, the industrial concentration of China’s steel industry is foreseen to increase.

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