In April this year, the purchasing managers index (PMI) for the Chinese steel sector was at 45.9 percent, up 3.7 percentage points as compared to March, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP). In April, since China took measures to stimulate resumption of production and construction activities, demand from downstream users improved, exerting a positive impact on steel production and inventory consumption. Nevertheless, the steel industry PMI has not returned to the 50 mark, signaling that consumption is still not sufficiently high.
In April, the production index for the Chinese steel sector increased by 14.1 percentage points compared to the previous month to 53.4 percent.
Meanwhile, in April the sub-index for new orders in the steel sector saw a rise of 1.4 percentage points month on month to 39.9 percent. The new export orders index indicated a slight increase of 0.5 percentage points month on month to 27.8 percent, but it has been lower than 30 percent for two consecutive months amid slack demand from overseas markets due to the ongoing negative impact from the coronavirus pandemic worldwide and high competition in the international market.
In the given month, due to better demand from downstream users, the finished steel inventory index decreased to 38.8 percent, down 2.8 percentage points month on month.
At the same time, the purchase price index of raw materials in the Chinese steel sector stood at 40.6 percent, indicating a drop of 0.1 percentage point month on month.
As for May, CSLC has forecast that demand for steel will continue to improve, though demand in southern China will likely slacken due to the coming rainy weather. Moreover, infrastructure will speed up, which will stimulate demand for rebar and wire rod, while demand for flat steel will not be as good as for long steel.
