S&P Global Platts China Steel Sentiment Index Hits 12-Month High In September
Chinese steel market sentiment reached a 12-month high in September on improved expectations for domestic steel orders, according to the latest S&P Global Platts China Steel Sentiment Index (CSSI), which showed a headline reading of 60.87 out of a possible 100 points.
The September CSSI rose by 10.11 points from 50.76 in August and remained above the 50 point threshold for the third-consecutive month. A reading above 50 indicates expectations of an increase/expansion and a reading below 50 indicates a decrease/contraction.
The outlook for domestic steel orders increased by 12.20 points from last month to 63.76 in September, while expectations for export orders fell 14.06 points from August to 27.45 this month.
The outlook for long steel product prices reached its highest level since November last year, rising 17.50 points from August to 80.00 in September. Expectations for flat steel prices fell for the second month in a row, down 30.98 points to 46.88 in September from 77.86 in August.
The outlook for crude steel production was down 12.70 points on the month before to 42.86, while steel inventories held by traders were seen rising this month from August levels.
“Our index history shows that September is one of the stronger months in China’s steel industry as construction activity picks up as the weather cools, while there is typically some restocking ahead of the Golden Week holidays in early October. This year is more buoyant than usual as steel prices have hit four or five year highs and the upcoming 19th Party Congress in Beijing could result in some production curtailments and tighten up supply,” said Paul Bartholomew, senior managing editor of steel & raw materials for S&P Global Platts.
“Demand continues to come primarily from domestic customers and this month there is a particularly strong outlook for prices of long steel products, such as rebar. Steel inventories are expected to rise on the back of strong production levels and some customer resistance to elevated prices, but could be offset by softer crude steel output over the next month,” said Bartholomew.
The CSSI is based on a survey of 75 to 90 China-based market participants including traders and steel mills. Data is compiled by Dai Yuelin, Sharon Liao, Zhang Jing, Joy Zhuo, Lucy Tang and David He in Shanghai.
According to S&P Global Platts price assessments, separate to the CSSI, the Platts China export hot rolled coil price averaged $543.2 per metric ton (mt), free on board (FOB) China in August. This was up 10% on $493.2/mt FOB in July.