China faced weaker steel demand from the downstream sector
China faced weaker steel demand from the downstream sector

China faced weaker steel demand from the downstream sector

  • 10-May-2022 6:20 PM
  • Journalist: Li Hua

Shanghai, China: As per our sources, despite a modest recovery expected in late April, Steel demand from China's manufacturing sector is expected to continue in May as declining overseas demand for Chinese-made goods challenges the country's Steel sector. Also, due to the COVID-19 resurgence, China's Steel manufacturing industry purchasing manager index (PMI) declined for the second month in April. However, Steel's logistics and manufacturing activity have gradually been restored in several COVID-affected areas.

To prevent the pandemic, Shanghai, Beijing, and other cities remained under a lockdown or social restrictions as of May 5. Shanghai and Beijing are China's two most important economic cities, crucial for industrial Steel development. The PMI dropped to 47-47.5 points in April, down from 49-49.5 points in March. New orders in the manufacturing sector decreased to 42-43 points in April, down from 48-49 points in March, while export orders fell to 41-42 points, down from 47-48 points in March. Since the COVID-19 outbreak in China in February, the sub-indices of output, new orders, and new export orders for Steel have been at their lowest levels.

According to sources, Steel manufacturing activities may recover more slowly in May as the highly contagious coronavirus needs time to control, putting May under pressure. COVID-19 is prevented through zero tolerance in China. When household earnings are under strain, sluggish domestic consumption of Steel is also expected to hamper the industrial Steel sector's rebound. Soaring energy prices have caused abroad customers to cut back on non-essential purchases, while overseas Steel manufacturing factory operations have nearly normalized, lowering their dependency on Chinese goods.

As per ChemAnalyst," The Steel prices in the second half of 2022 are expected to increase due to the rising demand from the construction and manufacturing industries. In the ending of the second quarter or early third quarter, the construction and its related production sectors are expected to gain friction, and Steel prices are anticipated to decrease slightly."

Related News