China Jan steel PMI rises to 47.1, virus to affect demand
"In February, there will be delays in resumption of existing construction sites and launches of new projects, so chances are little for demand to revive rapidly, though the market will see a substantial expansion in demand once the virus is defeated and amid investments in infrastructure and property projects," CSLPC pointed out in the release.
Source: CSLPC website
For January, China's steel demand showed signs of slowing with the Chinese New Year (CNY) holiday falling in late January while steel production was stable, resulting in the rises in steel stocks in the ferrous value chain, though the steel prices were rangebound, the committee summarized the country's steel market last month.
Last month, new orders including both domestic sales and exports stayed in contraction, though overall the sub-index rebounded 7.6 basis points on month to 43.8, and that for exports recovered by 14.1 basis points to 49.7 or in the contraction zone for 17 months.
Chinese steel mills, however, maintained their output steady on the anticipation of demand recovery after the CNY holiday originally over January 24-30, and the sub-index for production also recovered by 2.6 basis points on month to 46.7, and the sentiment returned to optimism, posting at 52.9, or up 3.1 basis points on month.
Lower sales especially towards the end of January saw the finished steel pile up, and the sub-index for stocks went up further by 1.6 basis points on month to 45.3, with the tonnage for five major steel products at the traders' warehouses in 20 Chinese cities up 1.3 million tonnes on month to 8.12 million tonnes by the end of last month.
Among the total traders' steel stocks, that for rebar grew the most by 31.2% on month, and hot-rolled coil up the least by 3.2% on month, and the volume at the ports totalled 1.15 million tonnes, or up 180,000 tonnes on month.
China's steel prices, however, had been rather stable in January because of the restocking by not only the steel traders but also the Chinese steel mills ahead of the CNY holiday.
By the end of 2019, China's property market had still persisted in an expansion zone, which sent a positive sign to the steel producers, mainly as the investment in the sector grew 9.9% on year for the whole 2019, or up 0.4 percentage point than that for 2018, and the newly-launched property projects grew by 8.7% on year in area, or 3.5 percentage points higher than that for 2018, the committee noted.
The pace of climb-up, however, may slow down in 2020 as both the land leases and bidding prices declined on year for 2019, it warned.
Written by Hongmei Li, li.hongmei@mysteel.com
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