China’s steel sector contracted at faster pace in Oct as real estate remained sluggish, support from infrastructure investment plateaued
COMMODITIES DATA MACRO
China’s steel sector contracted at faster pace in Oct as real estate remained sluggish, support from infrastructure investment plateaued
COMMODITIES DATA MACRO

China’s steel sector contracted at faster pace in Oct as real estate remained sluggish, support from infrastructure investment plateaued

 

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The Purchasing Managers’ Index (PMI) for China’s steel industry declined to 44.3% in October, falling by 2.3 percentage points from the previous month, ending a two-month recovering streak, according to the official index compiler – CFLP Steel Logistics Professional Committee (CSLPC).

Sub-indexes showed that the sector’s demand remained sluggish, production weakened further, steel prices and steel-making material prices both declined and steel mills suffered widespread losses, said CSLPC.

In October, China’s domestic steel demand first increased driven by restocking demand and speculation, followed by a fast decline as market stabilized from a brief hype, it said. The sub-index for new orders fell to 43.4% in October, falling by 1.9 percentage point from the previous month.

The weakness in demand was mainly attributable to two reasons: the driving force from the infrastructure investment is peaking and demand from the real estate sector continues to weaken, according to the report.

China’s infrastructure investment maintained growth in October, but there wasn’t notable pick-up from the previous month, indicating that infrastructure investment is plateauing and its support for steel demand in easing, it said.

China’s real estate development investment fell 8% year over year in January -September, new construction starts tumbled 38% and the real estate property index hit the lowest this year, showed official data.

China’s overall steel production is in a downtrend amid sluggish market demand and production curbs for environment protection. The sub-index for production fell by 9.1 percentage points to 38.8%, showed the report.

Going forward, steel market demand is expected to drop slightly in November and steel production is expected maintain stable operations, with some upside room, it said.

Steel prices may decline slightly in December given the persistent oversupply, it added.

China's Purchasing Managers' Index (PMI) for its steel industry fell to 44.3% in October, falling by 2.3 percentage points from the previous month, ending a two-month rebounding streak, according to the official index compiler - CFLP Steel Logistics Professional Committee (CSLPC).