CSLPC: China Nov steel PMI hits over one-year low

In November, the Purchasing Managers' Index (PMI) for China's steel industry fell for the second month by 1.7 basis points to 36.6, the same as in February 2020 when the country was in the fierce battle against the COVID-19, mainly due to the weakening demand in winter and lower steel production amid a series of curbing measures, the official index compiler - CFLP Steel Logistics Professional Committee (CSLPC) - shared in its release on November 30.

This month, steelmaking raw material prices fell obviously and domestic steel prices had been on a downtrend throughout the month, and for December, "China's steel demand and supply will both soften further, steel prices will be narrowly rangebound, while raw materials prices may stabilize and even recover, " CSLPC anticipated.

In December, China's steel demand will stay subdued, as construction including infrastructure and property projects will be stalled by the cold weather while steel consumption in automaking and shipbuilding will stay steady, according to the release.

As for raw materials, iron ore supply may reduce from some major miners and coke prices may have rather small room for further drops after multiple cuts, which in all may limit the fluctuation in domestic steel prices, the committee shared its projection.

In November, the sub-index of new steel orders including domestic sales and exports fell to 25.9, the year's low and also the lowest at least since November 2018, according to the CSLPC' graph in the release, which was down for second month by 2.3 basis points, as domesitc demand was tepid, though South and East China were comparatively better than the cold North China.

Among all the new orders, exports appeared slightly better, as the sub-index dropped for the second month by 3.9 basis points to 34.8, or below 40 for the fifth straight month, mainly due to lower steel output in China and lower exports with the cancellation of export tax rebates, and at the same time higher production in foreign countries such as India, the U.S. and Japan to fill up their own gaps in demand and supply, CSLPC explained.

As for China's steel production in November, the sub-index decreased to a 21-month low of 33.5, down for the second month by 3.3 basis points or having been in the contraction zone since July, mainly as some domestic steel mills had been cutting down production to meet the annual cap on them, while some others in North China had been in another round of restrictive measures in winter, the committee noted.

Daily crude steel output among China's major steel mills over November 1-20, thus, fell by 3.7% on month or down 17% on year to 1.76 million tonnes/day, the committee quoted the data from the China Iron & Steel Association.

For November, the sub-index of steel mills' raw materials procurement prices slumped to a new low since November 2019, reaching 39.1 or down 20.9 basis points on month due to the stabilization in bulk commodities supplies and prices as well as lower proccurement by the Chinese steel mills on lower production, CSLPC highlighted.

Written by Rong Zhang, zhangronga@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.