China’s May steel PMI speeds up in recovery, hitting 50.9
Source: Mysteel
Jun 01, 2020 13:00
China’s steel PMI since January 2016
Source: CSLPC website
For June, the output growth may ease in pace amid the pollution control, while demand may soften seasonally, and the fundamentals may be just about balanced, the committee shared.
On the other hand, global iron ore shipment from Brazil may stay low, as the pandemic has yet been under control in the country, and the raw material price may hover high, leading to higher production costs among the Chinese steel mills, CSLPC warned.
For May, the sub-index for new orders both domestic and overseas buyers increased further by 13 basis points on month to 52.9, as “the investment in infrastructure construction has driven up the demand for construction steel, even though the market had reached its traditional slack season in May,” CSLPC explained.
Among the total, demand from the overseas, however, saw little improvement amid the COVID-19 spread, and the sub-index for China’s steel exports orders reached only 31.9 for May despite a 4.1 basis point recovery from April or have stayed below 40 for the third month, according to CSLPC.
Steady improvement in demand especially in the domestic market led to further declines in finished steel stocks at both the Chinese steel mills and traders, CSLPC noted from the data of the China Iron and Steel Association (CISA).
As of May 20, five major steel products stocks among CISA’s member mills fell another 2.5 million tonnes on month to 14.9 million tonnes, though still 56% higher than the start of 2020, and stocks at the traders in 20 cities declined 6.3% from May 10 to about 14 million tonnes.
The sub-index for steel production, as a result, gained for the third month, up another 3 basis points on month to 56.4 in May, and CSLPC cited the data from China Iron and Steel Association (CISA), noting that daily crude steel output among CISA’s mill members averaged about 2.07 million tonnes/day for May, or up 6.4% on month and 1.2% higher on year.
Written by Anna Wu, wub@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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