GMT+8( BJT)

China’s steel PMI recovers further to 45.9 in April

China’s Purchasing Managers’ Index (PMI) for the steel industry recovered continuously in April, gaining another 3.7 basis points on month to 45.9, and both demand and production posted further growths, according to the latest release by the official index compiler CFLP Steel Logistics Professional Committee (CSLPC) on April 30.

“China’s domestic steel demand recovered further in April with the local authorities’ efforts to progress with the resumption of operations under the normalized epidemic control, and both the construction and manufacturing industries posted higher rate in returning to normal order,” CSLPC pointed out.

The sub-index for new steel orders for both domestic sales and exports recovered another 1.4 basis points on month to 39.9 in April, as “China’s steel demand was still relatively insufficient, and both the major projects and infrastructure investment had not fully shown their boost to the steel consumption yet,” CSLPC explained.

For April, the sub-index for China’s steel exports orders registered 27.8, staying below 30 for the second straight month though it up 0.5 basis point on month, because of the substantial shrinking in demand from overseas buyers with the outbreak of COVID-19 worldwide, according to the association.

The Chinese steel mills ramped up their output substantially in April on the continuing declines in steel inventories, and the sub-index in the aspect surged 14.1 basis point on month to 53.4, CSLPC’s statistics showed.

The further recovery in demand saw the stocks of the five major steel products both at the mills and traders decline further in April, with the tonnage at CISA’s member steel mills totalling 17.4 million tonnes as of April 20, down 646,300 tonnes from the end of March, and that at the traders in the 20 Chinese cities reduced by 4.8% from April 10 to 17.2 million tonnes, CSLPC quoted the data from CISA.

Faster growth in steel output than consumption, however, did impose pressure on China’s domestic steel prices, and the Shanghai rebar pricing index, for example, reversed down to Yuan 3,518/tonne ($498/t) as of April 26 from its recent high of Yuan 3,562/t on April 18, though still much higher than Yuan 3,441/t on April 2, CSLPC cited the data from other research institutions.

For May, China’s steel demand may recover further in general, though the demand for construction steel in some parts of South China may reduce because of the rainy season, and steel output may grow further but moderately as the demand and supply may struggle to return to a balanced point, and Chinese steel mills, thus, should be consciously controlling their production costs to maintain their steel margins, CSLPC warned.

Written by Nancy Zheng, zhengmm@mysteel.com

Edited by Hongmei Li, li.hongmei@mysteel.com