Posted on 03 Feb 2023
The Purchasing Managers' Index (PMI) for the steel industry in North China's Hebei province, the country's top steel production base, increased further during January to hit a five-month high of 51.1, climbing by another 1.9 basis points on month, according to the latest data released by Hebei Metallurgical Industry Association.
In parallel, Hebei's January result was 4.5 basis points higher than that for the national steel PMI. Though this reading also climbed from December, rising by another 2.3 basis point on month, the index only reached 46.6, connoting contraction, as Mysteel Global reported.
Despite weakened downstream demand for steel in Hebei around the Chinese New Year holiday (over January 21-27), the sub-index for new orders in January among the province's steel mills remained unchanged on month at 50, thanks to support from strong expectations for a post-holiday market recovery.
Also, after market participants noted the improved sentiment in the domestic steel market, they paid more attention to domestic customers, causing the sub-index for new export orders in January to decline by 4 basis points on month to 41.7, the Association's data showed.
At the same time, the sub-index for Hebei's steel production also recorded a healthy on-month increase of 6.8 basis points to reach 52.3, reflecting a revival of confidence among steel mills for a future steel-market recovery.
On the other hand, the sub-index for finished steel stocks held by Hebei's steelmakers jumped by 22.9 basis points on month to 76.8, according to the Association. High production costs and the brightening market view resulted in steel mills tending to defend their offering prices – trying to recover their profit margins – so sales slowed, it noted. Contributing too was the fact that integrated steelmakers produced as normal during the Chinese New Year break but could not deliver because customers and logistics firms were on holiday, as reported.
In addition, the sub-index for raw materials stocks held by these steelmakers also climbed by 11.4 basis points from December, recording 59.1 for January, according to the release. The improved market sentiment had encouraged steel mills to lift their purchases of raw materials in tandem, Mysteel Global notes.
Source:Mysteel Global
