WSD's macro and micro indices for China cover various indicators that tie directly or indirectly into steel consumption. The macro index incorporates fixed asset investment (which, unfortunately, doesn't account for inflation and includes land sales and M&A activity), retail sales, M2 money supply, and value added by industry. The largest weightings are fixed asset investment and retail sales at 35 percent and 25 percent respectively. The micro index includes the unit production of automobiles, ships, electricity, cement, tractors, locomotives, internal combustion engines, air conditioners, metal cutting tools, industrial boilers and square meters of construction activity. The largest weighted factors are cement production and square meters of construction activity at 35 percent and 15 percent respectively.
As indicated in the accompanying charts, steel consumption has lagged behind both the macro and micro indices. The weighted macro steel-consuming index has far outpaced steel demand in the country. In February 2013, the macro index was up 62 percent compared to three years ago, the micro index was up 38 percent and apparent steel consumption was up 19 percent.
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