China’s steel industry’s activities contracted at a faster pace in July
China’s steel industry’s activities contracted at a faster pace in July

China’s steel industry’s activities contracted at a faster pace in July

 

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China’s steel industry’s activities contracted at a faster pace in July, with the industry’s Purchasing Managers’ Index (PMI) hitting 33%, falling by 3.2 percentage points from the previous month, according to a survey by the China Steel Logistics Committee (CSLC). That’s well below the 50% mark that separate expansion from contraction.

The market is going through a light season, with demand remaining sluggish, production falling and prices of steel products and raw materials declining continuously, according to the CSLC.

The sub-index for new orders was unchanged at 25.9%, remaining below 30% for the second straight month and the sub-index for new export orders stood at 39.4%, falling by 7.7 percentage points from the previous month, showed the survey.

High-temperature and rainy weather has bought steel market into a short-term light season, demand from the real estate sector, the biggest steel consumer, weakened further, and meanwhile, overseas demand also shrank amid more complex external environment and downward pressure on major economies, it said.

On the supply side, steelmakers reduced production due to weak demand and falling prices, with the sub-index for steel production sliding by 8 percentage points to 26.1%.

Steel prices declined further amid sluggish demand and insufficient market confidence. Steel rebar prices hit 3,800 yuan per tonne on July 21, the lowest level in nearly 20 months, slumping from 4,278 yuan tonne on July 1, said the committee.

The sub-index for purchasing prices of raw materials declined by 5.1 percentage points to 24.6%, falling for the third consecutive month amid steel production cut and commodity price declines in the global market as the US Federal Reserves hike rates.

Looking ahead, market demand will likely rebound slightly in August as the top authority repeated calls to actively expand demand and infrastructure investment will likely pick up and real estate sector may see marginal improvement.

Steelmakers’ production may gradually stabilize as profits recovers which may lead to slight pick-up in steel and steelmaking materials’ prices, it added.

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