In September this year, the purchasing managers' index (PMI) of the steel sector in China’s Hebei Province decreased to 52.3 percent, down 0.2 percentage points month on month, as announced by the Hebei Province Metallurgical Industry Association (MIA). In the given month, the trend of the steel sector PMI in Hebei Province was in line with that for the whole of China, which decreased by 3.1 percentage points month on month to 43.9 percent.
In September, the overall new order index for Hebei Province’s steel sector stood at 54.0 percent, up 1.9 percentage points compared to the previous month, which was above 50 percent for the fifth consecutive month, indicating that policies to boost domestic demand have taken effect, bolstering demand for steel.
The new export order index stood at 40.5 percent, up 5.9 percentage points month on month.
In the given month, the production index for Hebei Province’s steel sector was at 54.0 percent, down 2.0 percentage points month on month.
At the same time, the inventory index for finished steel in Hebei Province declined to 46.0 percent, down 4.0 percentage points month on month.
In addition, the raw material inventory index for the steel sector in Hebei decreased to 46.0 percent, down 2.0 percentage points month on month.
Demand from downstream users has not been released to the extent that market players were expecting, which resulted in reduced consumption of steel inventories in September. Regardless of whether demand for steel can rebound to the expected levels after the increases in inventory following the holiday in October (a month which is also part of the traditional peak season), time will be needed to repair confidence and deal with the high levels of steel supply in the market. However, the good weather in October will be favorable for engineering construction, while steel prices will gain support from the high levels of raw material prices. It is expected that steel prices in October will likely edge down first and move up later in the month.
$1 = RMB 6.7796