In January, the purchasing managers index (PMI) for the Chinese steel sector was at 47.1 percent, four percentage points higher compared to December 2019, but still in the negative zone below 50 percent, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP). Demand was still slow during the month in question, though export sales improved, while at the same time steel production and prices were relatively stable, while expectations were mostly positive for the near future. But the outlook for demand and output in China after the holiday has worsened as the steel market operations will be affected by the coronavirus outbreak, said CSLC.
In January, the orders index increased by 7.6 percentage points to 43.8 percent, which means that demand kept going down but at much slower pace than in December. The export orders index surged by 14.1 percentage points to 49.7 percent as owing to the overall price increase in the international market Chinese steel (especially flat products) became much more competitive.
The production index for the Chinese steel sector in January was 46.7 percent, up 2.6 percentage points from the previous month. Though at the beginning of January the supply-demand balance in China was good, the slowdown of demand at the end of the month led to the finished product inventory index increasing by 1.6 percentage points to 45.3 percent in the given month.
In February, the resumption of construction sites will be postponed affected by the new coronavirus epidemic, according to CSLC. However, after the crisis is resolved, demand will quickly rebound owing to sustainable investments in the infrastructure sector in real estate.