In July this year, the purchasing managers index (PMI) for the Chinese steel sector was at 43.1 percent, down 2.0 percentage point as compared to June, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP).
In July, the production index for the Chinese steel sector declined by 7.6 percentage points compared to the previous month to 43.1 percent.
At the same time, demand has also remained weak. In July the sub-index for new orders in the steel sector saw a rise of 2.0 percentage points month on month to 36.8 percent, which means that consumption has been declining, but at a slower pace. Moreover, the new export orders index indicated a decline of 11.5 percentage points month on month to 30.8 percent due to the change in the export tax rebate policy.
At the same time, the purchase price index of raw materials in the Chinese steel sector rose by 3.4 percentage points month on month, to 56.3 percent amid increasing raw material prices.
As for August, steel prices will likely see a rebounding trend as demand will improve following the end of the off-season, increasing demand from the real estate market, and a better performance in the vehicle market. However, the production of steel may decline due to production restrictions. Moreover, steel exports may continue to shrink amid the cancellation of tje export tax rebate as of August 1 and uncertainties regarding export duties.
$1 = RMB 6.461