In February this year, the purchasing managers index (PMI) for the Chinese steel sector was at 48.6 percent, up 4.3 percentage points as compared to January, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP). In February, Chinese steel production increased supported by good demand, while iron ore prices decreased, though remaining at high levels.
In February, the production index for the Chinese steel sector rose by 6.0 percentage points compared to the previous month to 54.7 percent amid the quick resumption of production activities following the Chinese New Year holiday as migrant workers were encouraged to enjoy the long holiday in the regions where they worked.
Meanwhile, in February the sub-index for new orders in the steel sector saw a rise of 8.3 percentage points month on month to 43.3 percent. Moreover, the new export orders index indicated a rise of 6.2 percentage points month on month to 61.4 percent amid the continuing recovery in overseas economies.
In the given month, the finished steel inventory index decreased to 38.1 percent, down 10.6 percentage points month on month as traders increased purchasing activities to embrace the traditional peak season for business.
At the same time, the purchase price index of raw materials in the Chinese steel sector decreased by 4.8 percentage points month on month, to 63.7 percent, though remaining at high levels at above 60 percent for the fourth consecutive month.
As for March, demand for steel will improve further with expected increase in production, which will reduce inventory of steel and exert a positive impact on steel prices, while iron ore prices are expected to move up.