Posted on 06 Jul 2022
The Purchasing Managers' Index for the steel industry in North China's Hebei province, the country's top steel production base, contracted further during June to hit a seven-month low of 41.3, down for the third month by another 2.1 basis points on month, according to the latest release by the Hebei Metallurgical Industry Association on its website.
With last month's result, Hebei's PMI has now been languishing below the threshold of 50 connoting contraction for fifteen consecutive months, Mysteel Global noted. Nevertheless, the result for June was 5.1 basis points higher compared with that for the national steel PMI, which posted a sharper fall of 4.6 basis points on month to just 36.2 last month.
For June, the sub-index for new orders among Hebei's steel mills slipped to 31.8, down by another 6.8 basis points from the previous month. The association cited the impact of the flood season for the slide, even though demand from downstream users had kicked in gradually on support of Beijing's series of measures to stabilize economic growth.
The sub-index for new export orders recovered 5.7 basis points on month to 37.5 in June after sliding for two months. Some domestic steel mills had increased their sales to overseas buyers, according to the release, aiming to maintain stable production on their lines when domestic steel prices had been falling sharply.
Last month, the sub-index for Hebei's steel production came in at 39.8, down 5.7 basis points from that for May, as more local steel producers conducted maintenance or reduced output, given the seasonal low period for steel consumption and the slump in steel prices, the association explained in the report.
The sub-index for finished steel stocks declined by 10 basis points on month to 60.5 in June. This was mainly thanks to the decrease in inventories held by Hebei's steel mills, the volume at traders' warehouses having increased slightly during the period.
The sub-index for raw materials stocks held by the province's steelmakers continued rising in June, surging by 16.6 basis points from May to 43.9, as local mills had built up their stocks of steelmaking raw materials after the COVID resurgence had been brought under control. Their consumption decreased with the slump in finished steel prices however, the release showed.
Source:Mysteel Global
