In October this year, the purchasing managers' index (PMI) of the steel sector in China’s Hebei Province decreased to 47.9 percent, down 0.4 percentage points month on month, as announced by the Hebei Province Metallurgical Industry Association (MIA). In the given month, the PMI of the steel sector in Hebei Province performed better than the steel sector PMI for the whole of China, which dropped by 2.9 percentage points month on month to its lowest level of the past 46 months.
In October, the overall new order index for Hebei Province’s steel sector stood at 48.6 percent, down 1.7 percentage points compared to the previous month. In the given month, demand for steel from downstream users slackened to some extent, while transaction activities were at medium levels, though slower than in September.
In the given month, the production index for Hebei Province’s steel sector was at 45.6 percent, up 1.0 percentage point month on month. In October, following the week-long holiday at the start of the month, the capacity utilization rate of steelmakers in Hebei was higher than in September, while from mid-October the areas of Tangshan and Handan in Hebei implemented production restrictions again to ensure good air quality, which curbed the output of the local steel industry, and so the production index in Hebei in the given month only indicated a slight rise.
At the same time, the inventory index for finished steel in Hebei Province increased to 51.4 percent, rising by 6.7 percentage points month on month. Due to slackening demand, inventory levels in Hebei increased in October.
In addition, the raw material inventory index for the steel sector in Hebei increased to 46.0 percent, up 0.7 percentage points month on month. The raw material purchase price index stood at 44.5 percent, down 6.5 percentage points month on month. In October, import iron ore and coke prices decreased, weakening the support for finished steel prices from the cost side.
The Hebei Province Metallurgical Industry Association said it expects that demand for finished steel in November will slacken as during this month there is a shift from the peak season to the offseason amid a significant drop in temperatures in northern China, which will lower outdoor construction activities there. However, demand from infrastructure construction and the real estate industry in other regions will likely remain resilient, which will provide support for steel prices in China. Meanwhile, production restriction measures will be implemented strictly during the winter season. It is thought that both supply and demand in the steel market will be weak, while steel prices are expected to fluctuate within a limited range at relatively low levels, the association said.