Steel sector PMI in Hebei rises slightly during Sept, still below 50%

Tuesday, 08 October 2019 10:57:05 (GMT+3)   |   Shanghai

In September this year, the purchasing managers' index (PMI) of the steel sector in China’s Hebei Province increased to 48.3 percent, up 1.3 percentage points month on month, as announced by the Hebei Province Metallurgical Industry Association (MIA). The PMI of the steel sector in Hebei Province performed better than the steel sector PMI for the whole China, which dropped by 0.7 percentage points month on month in September.

In September, the overall new order index for Hebei Province’s steel sector stood at 50.3 percent, up 6.1 percentage points compared to the previous month. In the given month, finished steel prices in the Chinese domestic market indicated a rising trend amid more purchasing activities by downstream users.

In the given month, the production index for Hebei Province’s steel sector was at 44.6 percent, down 4.5 percentage points month on month. In September, steelmakers in Tangshan and Handan areas in Hebei implemented production restrictions to ensure good air quality for the National Day parade, which curbed the output of the steel industry in Hebei Province.

At the same time, the inventory index for finished steel in Hebei Province decreased to 44.7 percent, decreasing by 3.5 percentage points month on month. The production restrictions and good demand from downstream users contributed to the decreasing trend of finished steel inventories, easing the imbalance between supply and demand.

In addition, the raw material inventory index for the steel sector in Hebei increased to 45.3 percent, up 3.0 percentage points month on month. Except for coke prices which indicated declines, the prices of other raw material prices rebounded in September.

The Hebei Province Metallurgical Industry Association said it expects that demand for finished steel in October will continue to improve as it is still a traditional peak season for business and so market participants are bullish on the future prospects for the local steel market. However, the continuous tightening of controls in the real estate industry will drag down investment in the real estate market and exert a negative impact on demand for finished steel. However, investment in infrastructure construction will improve as China has issued policies to stimulate the development of the infrastructure industry. It is thought that finished steel prices in Hebei Province will likely edge up in the first part of October, though market players are not excessively optimistic on the prospects for the market in the latter part of October as the demand will slacken when the weather becomes colder. 

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