China’s industrial activities restart earlier

Posted on 03 March 2021

The over 3,000 questionaires Mysteel collected from the industrial enterprise in China’s domestic steel market in the working days of February after the Chinese New Year (CNY) holiday confirmed that the end-users have resumed their operations earlier in 2021 after the festival than in the previous years, mainly as many of the employees stayed in their migrant cities for the celebration, as per the strong encouragement of Beijing.

Among the steel-consuming industries are structure steel, machinery and engineering, auto and home appliances manufacturers, and they all confirmed earlier resumption of normal operations as well as a prevalent optimism on the country’s macro-economy and their respective industrial outlook in the near term.

Of the four industries, 76.3% of their workers had already returned to work by February 26 - the Lantern Festival - that marks the end of the CNY celebration in China.

Last year, Mysteel also conducted a survey among 482 enterprises from 12 industries including the four, only 47.8% of their workers came back to work by the end of February, though the pandemic outbreak in 2020 made this only for reference.

By February 26, all the workers in the home appliance plants, 77.8% of the workers in the engineering and machinery, 73.3% of the workers in the structure steel, and 64.2% of the workers in the auto makers had returned to their posts.

By the end of February, finished products inventories at the dominant majority or 63.2% of the enterprises in these four sectors posted little variation from before the CNY break due to the limited buying from their end-users, Mysteel understood from the questionnaires, and in details, 76.5% of the automakers, 66.7% of the structure steel suppliers, 55.6% of the construction machinery makers, and 45.5% of the home appliances manufacturers confirmed little change.

The faster return to normal operations has also led to 72.4% of the industrial companies’ anticipation on raw material price rises after the CNY holiday, though 14.5% of them did not believe so.

By industries, 88.2% of the automakers, for example, expected their raw material prices to increase, and 11.8% of them anticipating the prices to stay flat. 76.7% of the structure steel suppliers expected their raw material costs to be up, 72.7% of the home appliances producers voted for price rises, and half of the companies in the machinery and engineering industry were prepared for raw material price rises too, the questionnaires showed.

Around 44.7% of the companies in the four sectors, however, had stocked up some raw materials beforehand to tide them over the price strengthening should it materialize, and among the surveyed enterprises, and 46.1% of them plan to do so immediately after the break to get ready for the earlier-than-usual demand return from their consumers, according to the survey.

The breakdown by industrial sector showed that the machinery manufacturers were the best prepared, with 55.6% of them having stocked up raw materials, while home appliances manufacturers were the least prepared with only 36.4% of them having procured some raw materials.

By the end of February, a dominant majority or 67.1% of the enterprises in the four sectors confirmed sufficient capital flows to resume businesses after the holiday, and by industry, 82.4% of the automakers, 66.7% of the machinery and engineering companies, 63.3% of structure steel producers, and 54.6% of home appliances makers expressed confidence in their financial conditions, according to the questionnaires.

Source: Mysteel

Source : Mysteel Global