Posted on 06 Sep 2024
The Purchasing Managers' Index (PMI) for the steel industry in North China's Hebei province, the country's top steel production base, declined by another 5.1 percentage points on month to sit at 34.4 in August, according to a release from the Hebei Metallurgical Industry Association. The reading has now declined for four consecutive months and is the lowest since the index was launched in 2018, Mysteel Global notes.
Hebei's PMI reading last month was also 6 percentage points lower from that of the national steel PMI which fell by another 2.1 percentage points on month to 40.4 in August for a third successive on-month decline, as reported.
The sub-index for new orders received by Hebei's steel mills inched up by 0.6 percentage point on month to reach 25.6 in August. Sentiment in the steel market improved slightly last month thanks to the accelerated issuance of new special bonds and to the weakening impact of seasonal factors such as high temperatures and heavy rains, the association noted.
In parallel, the sub-index for new steel export orders won by Hebei mills gained 2.2 percentage points on month to 52.2 in August. Strong market hopes for an interest rate cut by the US Federal Reserve in September had prompted overseas buyers to increase their steel purchases last month, the release explained.
However, the continuous drop in steel prices and expanded losses among many Hebei steel mills remained, forcing the steelmakers to cut production or conduct maintenance last month. The sub-index for Hebei's steel production plunged by 19 percentage points on month to 28.6 in August.
The production cutbacks of the mills, combined with the rapid digestion of old-standard rebar before new standards become mandatory later this month, together saw the sub-index for steel inventories held by Hebei steelmakers drop by 10.3 percentage points on month to register 56.4 in August.
Meanwhile, the sub-index for raw material stocks held by local steelmakers also slipped by 1.2 percentage points from July to 33.3 last month, as loss-bearing steelmakers had little appetite for raw materials and just purchased feedstocks for their immediate needs.
Source:Mysteel Global
