Posted on 01 Jul 2021
In June, China’s Purchasing Managers’ Index (PMI) for its steel industry scored 45.1, or having reversed down by 1 basis point on month, and domestic steel demand eased, while steel production was still growing, leading to higher supply, the official index compiler - CFLP Steel Logistics Professional Committee (CSLPC), shared its analysis in the release on June 30.
As for July, “China’s domestic steel demand may shrink further, steel prices may be narrowly rangebound instead of substantial recoveries, and raw materials prices may incline further, and domestic steel mills may slow down the pace further in ramping up their output,” CSLPC anticipated.
In June, the sub-index of new steel orders including domestic sales and exports fell for the third straight month by another 4.6 basis points to 34.8, mainly due to the seasonal low demand this month, resurgence of COVID-19 cases in some Chinese regions, and the dampened buying enthusiasm because of persistently high steel prices in early June, according to the release.
Among the new sales, that of new exports orders slipped for the second month by another 1.6 basis points to 42.3, partly as the aftermath of China’s cancellation of tax rebates on steel exports starting May 1, it highlighted.
As for China’s steel production in June, the sub-index reversed down 0.7 basis point on month to 50.7, though still in the expansion zone, and many steel mills had been imposed on stringent restriction on their production at the start and towards the end of month.
The daily steel output among the major steel mills under the survey of the China Iron & Steel Association (CISA) averaged 2.34 million tonnes/day over June 1-10, lower than the 2.4 million t/y for June 11-20, though the monthly output may decline mostly on month, committee projected.
During June, the sub-index of the steelmaking raw materials procurement prices slid for the second month by 10.2 basis points to 52.9, though still relatively high and in the expansion zone for the eighth month, and mills were still under pressure of high production costs, even though steelmaking raw material prices softened substantially in the second half with the related governing bodies’ efforts in stabilizing the market after the surges in the first half, CSLPC said.
The 62% grade iron ore pricing index, for example, soared to $222.35/dmt on June 15, or up 20% from the low towards the end of May, with the surge also more pronounced than steel prices, according to the release.
Source:Mysteel Global
