[ferro-alloys.com] China's manufacturing sector weakened further in June as trade tensions with the United States deterred new sales and production, and contributed to lower steel prices in the month.

The National Bureau of Statistics' manufacturing purchasing managers' index for June was flat on the month before at 49.4 points, while the manufacturing PMI published by Caixin/Markit Manufacturing Purchasing Managers' Index was also 49.4 in June, down from 50.2 in May.

A reading below 50 points indicates the sector, which consumes around a third of the steel China produces, is technically in contraction.

In its report on Monday, Caixin said manufacturing output fell for the first time in five months in June with companies pointing to tensions with the US for the weaker sentiment. New orders dropped for the first time since January and export demand also softened in June.

Factory gate prices rose slightly in June from a month ago due to higher input costs, but other manufacturers said they had trimmed prices in a bid to incentivize sales, Caixin said.

In the NBS report -- sometimes known as China's "official" manufacturing PMI -- it was noted that "market order growth momentum is weak and the foreign trade development is tightening."

The average price of hot-rolled coil, which is the key steel product used in manufacturing, dropped by around 4% in June to be assessed at Yuan 3,846.7/mt ($562/mt), from Yuan 4,012.5/mt in May, according to S&P Global Platts data.

Chinese steel market sources said Monday that government attempts to stimulate manufacturing consumption had yet to generate any significant boost to steel prices. A lack of demand for manufactured goods remained the biggest drag on China's manufacturing sector.

(S&P Global Platts)

• [Editor:王可]