China's Purchasing Managers' Index (PMI) for steel sector recovered to 50.9 in May from 45.9 a month earlier, data from the CFLP Steel Logistics Professional Committee (CSLPC) showed, indicating steel market recovery has gathered pace after fallout of the Covid-19 pandemic.
This is the first time that the figure has bounced back to expansion territory following sluggish for eleven months since June last year and a multi-year low of 36.6 recorded in February this year.
May has seen quickened decline of finished steel stocks at both steelmakers and in the whole country, as demand increased alongside rebooting economic activity. This also encouraged stronger steel production and pickups of raw material.
Sub-index of new orders was 52.9, marking a strong rebound of 13 percentage points from April. It indicated a recovery of steel demand as infrastructure projects bolstered construction steel products market.
Daily rebar purchases by end users in Shanghai further climbed up 13.5% on average in May, the CSLPC monitoring data showed. It was learned steel demand was particularly good in East China and South China regions.
However, demand from global market remained low as many countries economic activity was still constrained by the spreading Covid-19 pandemic. The gauge for new export orders came in at 31.9 last month, staying below 40 for three consecutive months.
Steel production further gathered pace last month with the sub-index for steel production up from 53.4 to 56.4. Data from China Iron and Steel Association (CISA) showed steel production averaged 2.07 million tonnes per day in May, up 6.39% from April and rising 1.18% year on year.
Purchases of raw materials rose 2.2 percentage points to 51.0, and raw material inventory edged up 2.9 percentage points to 41.2.
Sub-index of the finished steel inventories slumped from 38.8 to 29.2 in May, suggesting the swiftly recovering demand from end users.
CISA reported stocks of major steel products in 20 main cities stood at 14.03million tonnes by May 20, a 6.3% decline from ten days ago, marking drops for seven sessions on ten-day basis.
(Writing by Tammy Yang Editing by Jessie Jia)
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