China's Steel Industry Sees Uptick in PMI During January

China: In January, the Purchasing Managers Index (PMI) for China's Steel sector increased two and a half percentage points from the previous month, reaching 46.6 percent. The production index for the same sector followed suit with a 6.8 percentage point improvement to 50.2 percent.

The Steel market experienced improved demand from downstream users in January, resulting in the new order index standing at 43.9 percent - a 5.0 percentage point increase from December. The easing of Covid-19 measures created an optimistic atmosphere for the Steel market, prompting users to increase their stockpiles for the month.

In January, raw material prices rose, causing an increase in production costs for Steelmakers. Additionally, the improved outlook of the market encouraged Steelmakers to buy more raw materials. The index of raw material purchase prices in January was 66.6 percent, a 6.8 percentage point jump from December.

In January, finished Steel inventories saw a significant increase of 11.2 percentage points from December, standing at an index of 52.8 percent.

The COVID19 pandemic has had a positive impact on the Steel industry, with demand expected to keep rising in February following the long Chinese New Year holiday and construction sites gradually resuming operations. Moreover, China's stimulus policies for the real estate industry have been implemented, providing a further boost to Steel demand in February and March. It is believed that this will cause a rise in production of Steel, as well as an increase in both demand for Steel and iron ore prices.