According to steel industry's February PMI (Purchase Management Index) index released by China Federation of Logistics&Purchasing Committee, China's February PMI index in steel industry was 42.8 percent, below 50 percent for two consecutive months. Although index indicates continuous stagnancy of overall domestic steel industy, part statistics have already displayed improvement. Therefore, majority market players see positive upward tendency of domestic steel industry in March.
In February, the production index showed in steel PMI statistics descended but the new orders index kept stable, and new export orders index even increased slightly. For the moment, steel reduction of output continues while demands inch up warily. On all accounts, the current downturn of steel industry is still promising to pick up.
Steel Mills Cut February Output
During steel mills'periodic reduction of output, new export orders index in February presented to be 47.6 percent, up 1.5 percentage points from January, though it was still below 50 percent. Meanwhile, new orders index stabilized at 36 percent, leveling off that in January.
Demands May Firm Up in Boom Season
In February, steel production index plummeted sharply to 39.4 percent, down 16 percentage points from January. Furthermore, the related purchasing activities drew back clearly. The procurement volume index in February was 44.3 percent, down 6 percentage points from January; raw materials inventory index proved 45.7 percent, down 4.5 percentage points compared with that in January.
Coupled with the upcoming traditional boom season of steel consumption in March, market players believe end users' demands are bound to accelerate. Nevertheless, domestic real estate industry and infrastructure construction are still at a low ebb, and thus overall demands recession in March may remit slightly.
Whereas, as the weather is getting warmer with gradual starts on construction, steel transactions are heading for augment. On the other hand, international steel demands pick up, which will boost domestic steel exports to a certain extent. It is predicted domestic feeble demands in the short run are expected to pick up slightly.
Reserve Requirement Ratio Cut Hustles Steel Industry
On February 24, China's Central Bank announced to cut reserve requirement ratio by 0.5 percentage points, promoting currency circulation in steel industry.
Source: Steel Home