China's steel sector purchasing managers' index (PMI) stood at 47.8% in June, down 0.1 percentage point from the previous month, remaining in contractionary territory, data from the China Federation of Logistics and Purchasing's Steel Logistics Professional Committee showed.

Domestic demand continued to shrink due to seasonal factors in June, while a slow recovery in manufacturing activity across major overseas economies kept overall steel demand subdued, and rising uncertainty in the global trade environment added to export pressure.

The new orders sub-index fell 0.5 percentage point from a month ago to 46.3%, staying in contraction. The new export orders index dropped 1.8 percentage points to 46.8%, reversing the prior month's rebound.

Under pressure from weak demand and elevated costs, steel mill production edged lower in June. The production index stood at 49.3%, up 0.6 percentage point from May but still below the 50% threshold.

Finished product inventories accumulated at a faster pace, with the inventory index surging 9.9 percentage points month on month to 52.9%, indicating slowing market absorption and rising stockpile pressure at mills.

The raw material purchase price index remained at historically high levels in June, while finished steel prices fell again. Although costs provided some support, persistently weak demand weighed on steel prices.

Looking ahead, the committee expects the steel sector to face continued downward pressure in July, with demand staying weak in the off-season, production further contracting, raw material prices fluctuating at elevated levels before easing, and steel prices remaining low.