China’s Steel Sector PMI Rises In January

In January this year, the purchasing managers index (PMI) for the Chinese steel sector was at 46.6 percent, up 2.3 percentage points compared to December last year, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP).In January, the production index for the Chinese steel sector stood at 50.2 percent, 6.8 percentage points higher than that recorded in December.

In January, the new order index stood at 43.9 percent, 5.0 percentage points higher compared to December, signaling improved demand from downstream users, even though there was a long holiday in the given month. The easing of Covid-19 measures made market players hold an optimistic attitude towards the future prospects for the steel market, and so users built up stocks in January.

Moreover, in January, the index of raw material purchase prices stood at 66.6 percent, 6.8 percentage points higher than in December. In January, raw material prices moved up, pushing up steelmakers’ production costs, while the better expectations for the market made steelmakers increase purchases of raw materials.

At the same time, in January, the index of inventories of finished steel stood at 52.8 percent, 11.2 percentage points higher than in December.

The easing impact of the Covid-19 pandemic exerted a positive impact on the steel industry, while the demand for steel will continue to improve in February following the long Chinese New Year holiday and the gradual resumption of work on construction sites. Moreover, stimulus policies for the real estate industry have been issued by Chinese government, which will positively affect the demand for steel in February and March. It is thought that the production of steel, demand for steel and iron ore prices may increase in February.

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