Chinese steel sector contracted at faster pace in May, shrinking for 3rd straight month

 

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Chinese steel industry’s PMI reached 35.2% in May, sliding 9.8 percentage points from the previous month, contracting for the third consecutive month, according to the China Federation of Logistics &Purchasing.

Sub-indexes showed that steel market demand remained weak, steel production declined further, material prices declined significantly, steel prices trended lower, it said.

The sub-index for new orders reached 27.4% in May, sliding 12.5 percentage points from the previous month, as activities in the real estate sector remained sluggish and local government bond issuance has been slow, leading to slow progress in infrastructure projects, it said.

The sub-index for steel production was 27.5%, slumping 19.7 percentage points from the previous month. The sub-index for raw material purchasing prices was 18.4%, slumping 18.3 percentage points and hit a new low in nearly a year.

Looking ahead, the steel market demand will likely decline further in June, steel mills will see pressure to cut production, material prices will remain weak while steel prices will fluctuate at low levels, it estimates.