China's steel sector faced a downturn in December, with the Purchasing Managers Index dropping to 46%, marking a 2.2 percentage point decline from November. New orders plunged to 43%, ending a three-month upward trend. The production index decreased to 45.8%, impacting steel prices negatively, while raw material purchase prices remained high at 76.5%, hinting at potential price softening in January.
The China Steel Logistics Committee (CSLC) under the China Federation of Logistics and Purchasing (CFLP) reported a downturn in the Chinese steel sector in December. The Purchasing Managers Index (PMI), a key indicator, recorded a significant drop to 46, indicating a decline of 2.2 points from November's figures. This downturn signals a challenging landscape for the steel industry.
In a concerning trend, the new order index plummeted to 43 in December, marking a stark 6.7 point decline compared to November. This decline abruptly halted a three-month upward trajectory, raising concerns about future market stability and demand for steel products.
Reflecting the industry's struggles, the production index for the Chinese steel sector also decreased to 45.8, down by 2.2 points from November. This decline in production indexes suggests potential challenges ahead, impacting steel prices adversely.
Despite a slight reduction from November, the index of raw material purchase prices remained high at 76.5 in December. This figure, although showing a marginal decrease of 0.5 points, still reflects relatively elevated raw material costs, signaling potential pressure on steel prices.
Looking ahead to January, forecasts suggest a potential slackening in steel demand, a factor expected to further dampen steel prices. Additionally, the weak performance of the steel market might lead to a softening in iron ore prices, posing challenges for the entire steel industry supply chain.
December witnessed a significant downturn in the Chinese steel sector, evident from the plunging PMI, new order index, and production index. The persistently high raw material purchase prices and forecasts of weakened demand in January foreshadow a challenging period ahead for the steel market, potentially impacting prices and industry dynamics.