In December last year, the purchasing managers index (PMI) for the Chinese steel sector was at 45.8 percent, down 3.4 percentage points as compared to November, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP). In December, Chinese steel production decreased, while iron ore prices increased sharply.
In December, the production index for the Chinese steel sector decreased by 5.6 percentage points compared to the previous month to 47.7 percent due to sluggish local demand.
Meanwhile, in December the sub-index for new orders in the steel sector saw a drop of 5.2 percentage points month on month to 42 percent. Moreover, the new export orders index indicated a rise of 8.5 percentage points month on month to 54.5 percent due to the economic recovery in the overseas market.
In the given month, the finished steel inventory index increased to 33.5 percent, up 1.3 percentage points month on month amid lower domestic demand.
At the same time, the purchase price index of raw materials in the Chinese steel sector rose by 2.4 percentage points month on month, to 72.1 percent amid uncertainty regarding iron ore supply and speculation in the futures market.
As for January, the weather will become colder and colder, and downstream industries will be on holiday from late January, which will negatively affect steel production and also result in reduced demand for steel, and so iron ore prices may indicate some declines, and steel prices will also soften.