China’s Jan steel PMI jumps back to expansion zone
In January, among all the sub-indices, that for new orders rose substantially by 13.9 basis points on month to 53.4, and that for new exports reversed up to by 8.3 basis points to 44.1 after having declining for the previous two months, as domestic demand fared better than expected because of a warmer winter so far and contractor’s rushing for project completion ahead of the Chinese New Year holiday that falls on early February in 2019, according to CSLPC.
Better demand from the overseas market, on the other hand, was mainly thanks to the seeming ease in cash flow tightness and the signs of ease in the Sino-US trade friction, CSLPC said.
At the same time, the sub-index for China’s steel production stayed in contraction zone, assessed at 46.8 despite a month-on-month recovery of 2.2 basis points, as the winter restriction was still in place and steel producers tend to slow down the pace ahead of the CNY holiday. The contraction has showed signs of slowing down, too, the committee pointed out.
In January, Chinese steel producers had been actively procuring raw materials, suggesting their optimism on the post-holiday market and ready to wrap up the production after the festive celebration.
Better demand and lower output saw Chinese steel mills’ finished steel stocks decline notedly by 1.1% from December 31 to 11.3 million tonnes by January 10, while the tonnage with the traders grew 3.6% on month to 8.5 million tonnes as of January 31, among which, 1.05 million tonnes were at the ports, up 2.7% on month, CSLPC quoted the numbers from the China Iron & Steel Association (CISA).
Under the circumstances, China’s domestic steel prices had been with a modest volatility, with the Shanghai rebar pricing index recorded at Yuan 3,819/tonne ($570/t) as of January 25, up from the Yuan 3,788/t on January 2, CSLPC quoted numbers from a domestic research institution, and raw material prices rebounded accordingly, with the sub-index for steelmaking raw material prices recovering by 6.6 basis points on month to 47.8 for January.
China’s steel demand is expected to grow for 2019, but it is worth closely monitoring the affection of Vale’s latest accident on both the seaborne iron ore supply as well as prices, the committee highlighted.
Written by Nancy Zheng, zhengmm@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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