China’s steel sector PMI down in Sept as insufficient demand put pressure on output

Wednesday, 30 September 2020 15:05:13 (GMT+3)   |   Shanghai
       

In September this year, the purchasing managers index (PMI) for the Chinese steel sector was at 43.9 percent, down 3.1 percentage points as compared to August, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP). In September, the steel production index declined reacting to lower-than-expected demand, while iron ore prices also decreased.

In September, the production index for the Chinese steel sector decreased by 3.3 percentage points compared to the previous month to 46 percent due to slack demand. The sub-index for new orders in the steel sector saw a drop of nine percentage points month on month to 36.6 percent.

However, the new export orders index indicated a rise of 11.9 percentage points month on month to 46.6 percent due to better demand in the international market and weaker sentiment locally.

In the given month, the finished steel inventory index decreased to 36.8 percent, down 0.4 percentage points month on month amid the lower outputs of steelmakers.

At the same time, the purchase price index of raw materials in the Chinese steel sector decreased by 17.3 percentage points month on month, to 54.1 percent, dropping down from the levels higher than 65 percent which had been seen in previous months. In September, prices of raw materials except for coke indicated a downward correction, easing the pressure from production costs.

As for October, CSLC forecasts that demand will likely rebound to some extent. Though steelmakers’ outputs will increase in the short term, the overall output in the fourth quarter will decrease compared to the third quarter, it stated.


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