The Purchasing Managers' Index (PMI) in China's steel sector, an economic indicator for the industry, fell to 35.2 in May, marking the third straight month of decline after returning to expansion territory in February for the first time since May 2020, according to the latest data released by the China Steel Logistics Professionals Committee (CSLPC).
The figure was down by 9.8 compared with the preceding month, indicating the activities in steel sector continued to be weaker, data showed.
The index for production tumbled 19.7 month on month to 27.5 in May, showing a general downtrend despite a gradual recovery by the end of the month, mainly as thin margins or losses forced some mills to arrange maintenance.
It is worth noting that the production index has been noticeably higher for seven continuous months than the new order index, which was registered at 27.4 in May, slumping by 12.5 from the month-ago level. This indicated a more obvious supply-demand imbalance with the contracting pace of demand outpacing that of production.
The new order index extended the decline in May, mainly affected by the continued weak demand in the real estate sector and slow infrastructure construction.
CSLPC expects steel demand to further dip in June, which would restrain steel production enthusiasm. Raw material prices would remain weak and steel prices may hover at a low level.
(Writing by Riley Liang Editing by Emma Yang)
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