China's manufacturing, steel markets strengthen on domestic sales

  • Wednesday, July 1, 2020
  • Source:ferro-alloys.com

  • Keywords:China,steel markets
[Fellow]China's manufacturing, steel markets strengthen on domestic sales

[ferro-alloys.com]Chinese manufacturing activity strengthened in June but the leading indices provided further evidence that the country's steel market recovery will be largely domestically-driven.

The manufacturing purchasing managers' index, published by Chinese media company Caixin, rose to 51.2 points in June from 50.7 in May, on the back of stronger production and better sales. It was the second consecutive monthly increase and the strongest reading since last December, the PMI released on June 1 showed.

Caixin's report showed that new domestic orders grew for the first time since January as factory activity was restored following the COVID-19 outbreak and subsequent restrictions. But new export orders continued to decline "amid reports of weak external demand."

The manufacturing PMI published by the National Bureau of Statistics, or NBS, on May 30 showed that new export orders rose by 7.3 percentage points from May to 42.6 in June. But a reading of below 50 meant that part of the sector continued to contract.

Overall new orders of 51.4 in June were up from 49.9 in May, while the headline index of 50.9 was better than 50.6 in May, according to the NBS.

Chinese domestic hot-rolled coil prices averaged Yuan 3,677/mt ($520/mt) in June, up from Yuan 3,479/mt ($492/mt) in May, S&P Global Platts data shows.

Domestic HRC mill margins averaged $38/mt in June, up slightly from $36/mt in May, but were dented by high iron ore prices.

Caixin said in its PMI that input prices for materials such as steel had increased for the first time in four months in June due to firmer market conditions. But manufacturers were finding it difficult to pass on higher costs at the factory gate.

This could provide some downward pressure on outright steel prices with manufacturing demand expected to be modest this year, far behind infrastructure and property construction.

China's steel exports over January-May fell by 14% on the year to 25 million mt, while steel imports into China over the same period grew 12% to 5.464 million mt.

China's steel market has been far stronger than other global markets since emerging from the pandemic in late March. Exports have been less appealing due to muted demand in Asian markets, lower prices and plenty of competing material.

(S&P Global Platts)

 

  • [Editor:王可]

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