In November this year, the purchasing managers' index (PMI) of the steel sector in China’s Hebei Province increased to 51.9 percent, up 4.0 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 kept moving in line with the steel sector PMI for the whole of China, which rose by 4.1 percentage points month on month to 45.4 percent in November. At the same time, the steel PMI in Hebei returned to the positive zone - above 50 percent – with increased demand, production, prices and raw material use observed in the province.
In November, the overall new order index for Hebei Province’s steel sector stood at 55.3 percent, up 6.7 percentage points compared to the previous month. In the given month, demand for steel from downstream users improved better than market players had expected, with active transaction activities.
In the given month, the production index for Hebei Province’s steel sector was at 50.8 percent, up 5.2 percentage points month on month. In November, steelmakers’ capacity utilization rates rose slightly, while the rises were limited due to production restrictions amid environmental protection measures.
At the same time, the inventory index for finished steel in Hebei Province decreased to 50.2 percent, decreasing by 1.2 percentage points month on month. However, due to sharp rises in finished steel prices, in late November traders become more cautious about concluding purchases and building up stocks.
In addition, the raw material inventory index for the steel sector in Hebei increased to 48.0 percent, up 2.0 percentage points month on month. The raw material purchase price index stood at 54.0 percent, up 9.5 percentage points month on month. In November, import iron ore and local scrap prices increased, bolstering the support for finished steel prices from the cost side.
The Hebei Province Metallurgical Industry Association said it expects that demand for steel from downstream users in northern China will slacken, which will result in more steel supplies circulating into southern China, easing the supply shortage in that part of the country. Though production restrictions in northern China for the winter season will continue, the good profit margins will stimulate steelmakers to increase their capacity utilization rates. It is thought that finished steel prices in China in December will edge down to some extent.