CSLPC: China's steel PMI falls to 46 in Dec

In December, China's sub-index of new steel orders ended a three-month rise, falling by 6.7 percentage points on month to 43, as heavy snow and cold snaps in many parts of the country had caused steel demand to rapidly fall, according to the Committee.

As for steel production, slack demand and shrinking steel margins saw domestic steelmakers' production enthusiasm weaken last month, CSLPC said. Consequently, the sub-index reversed down by 2.2 percentage points on month to 45.8.

Daily crude steel output among the member mills of the China Iron and Steel Association decreased further by 0.1% from early December to average 1.93 million tonnes/day over December 11-20, as against the 4.2% dip during the first ten days of the month, CSLPC said, quoting Association data.

Although the sub-index of steelmaking raw material procurement prices inched down 0.5 percentage point on month to 76.5 in December, "the reading remains at a high level, and it indicates raw material prices continue to maintain rapid upward momentum," CSLPC remarked.

As for January 2024, the contraction in steel demand will persist due to freezing temperatures across many regions. Meanwhile, with the Chinese New Year holiday (over February 10-17) approaching, steel demand from end-users will slow and traders will also leave the market for holiday breaks, according to the Committee.

Steel production will fall further this month due to low demand and more steel mills observing maintenance stoppages on blast furnaces ahead of the holiday, CSLPC predicted. It also estimated that raw materials prices would retreat from high levels and that finished steel prices would decline moderately.

Written by Rong Zhang, zhangronga@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com