CSLC: China's steel sector PMI falls to 46 month-low in October

Thursday, 31 October 2019 12:08:42 (GMT+3)   |   Shanghai

In October this year, the purchasing managers index (PMI) for the Chinese steel sector was at 41.9 percent, down 2.9 percentage points as compared to September, hitting the lowest level over the past 46 months, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP). Starting from October, several regions in northern China have implemented capacity restriction measures to ensure good air quality for the winter season, weakening the demand for steel and negatively affecting the situation in the Chinese steel industry.

In October, the production index for the Chinese steel sector decreased by 0.9 percentage points compared to the previous month to 42.3 percent. Meanwhile, in October the sub-index for new orders in the steel sector saw a decline of 6.3 percentage points month on month to 31.6 percent - the lowest level in almost four years. As it gets colder and colder in northern China, demand from downstream users has been shrinking.  

In the given month, the finished steel inventory index decreased to 36.8 percent, down 8.8 percentage points month on month, easing the oversupply situation. In particular, the inventory level of rebar saw the biggest decline in October.

At the same time, the purchase price index of raw materials in the Chinese steel sector stood at 33.9 percent, indicating a decline of 18 percentage points month on month due to the shrinking production activities of steelmakers. The weakening demand for raw materials resulted in the decline in raw material prices.

As for November, market sentiment is bearish due to production restriction measures implemented in the winter season and the expected weakening of demand for steel. 

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