China steel PMI picks up in Jan, a good start for steel sector General,  Viewpoint,  Steel Products 2018-01-31 13:18:00

The Purchasing Managers' Index (PMI) for China's steel sector rebounded to 50.9 in January from 50.2 in December, data from the China Federation of Logistics & Purchasing (CFLP) showed, holding for a ninth month above the 50-point mark that separates growth from contraction.

A sub-index for new orders continued declining to 55.8 in January from 58.3 a month ago, while New Export Orders bounced back sharply by 9.3 percentage points from December to 45.4. The change of the two indexes indicates domestic demand kept contracting but exports of the steel products improved dramatically.

"House building and other infrastructure constructions have generally stopped in the south in January, and building works in the south have been coming to an end," the CFLP said in a statement. "Demand kept shrinking as a whole this month."

Monitoring data showed full-month daily purchase of wire rebar in Shanghai market declined by 10.63% from December.

"Demand will remain poor in February. Few cargoes can be found in the market as most of mills won't go back to production from the Lunar New Year holiday," the CFLP said.

Spurred by price rallies in the overseas markets and cancellation of tentative tariffs of bar, rebar and wire, steel exports have picked up for two straight months from November.

Customs data showed exports steel products totaled 5.67 million tonnes in December, up 320,000 tonnes from a month ago.

The production index climbed to 51.9 from December's 46.1, going back to the expanded position after two months' contraction. Raw material purchasing index and raw material exporting index rose by 0.2 and 6.5 percentage points to 55.7 and 57.1, respectively.

Raw material stock index decreased 3.8 percentage points to 46.8 in January.

In 2017, China's production of crude steel, pig iron and steel products totaled 831.73 million, 710.76 million and 1,048.18 million tonnes, up 5.7%, 1.8% and 0.8% from a year ago, data showed from the National Bureau of Statistics.

Specifically in December, crude steel output rose 1.8% from a year ago to 67.05 million tonnes; pig iron stood at 54.72 million tonnes, down 4.4% on the year; steel products, 87.79 million tonnes, down 1.1%.

Data from China Iron and Steel Association (CISA) showed the daily crude steel production averaged 1.79 million tonnes at 101 nationwide key steel mills in the first ten days of January, up 0.44% from ten days ago; that averaged 1.78 million tonnes in ten days after, down 0.58%.

Inventories of finished goods rose for the first time since May to 55.9, up 7.6 percentage points from a month ago, the federation's data showed.

"Freezing rain and snow weather across many places of the country impacted transport and consumption of steel products and caused stocks piled up at mills," the federation said.

CISA said the social stocks of steel products totaled 8.18 million tonnes in January, 750,000 tonnes or 10.0% more than a month ago – 7.09 million tonnes at markets, up 10.1% MoM and 1.09 million tonnes at ports, up 9.7% MoM.

In January, domestic spot prices of steel products picked up before a slump in the early and middle of the month.

Eerier this month, price of rebar (HRB400 20mm) traded in Shanghai market continued the downside from December to the bottom of 3,760 yuan/t on January 15; prices have since then zigzagged up to 3,900 yuan/t on January 29.

The risks of high prices have diminished in the month and prices gained supports from the winter restocking activities, the CFLP said. "It's expected the prices to remain stable in the next month."

(Writing by Alex Guo  Editing by Harry Huo)
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