Steel Demand To Maintain Growth In October

SHANGHAI, Oct 7(SMM) – Overall, steel demand in September is basically in line with predictions of stable and positive growth, but at a limited rate.

Entering October, some construction sites were suspended during the National Day holiday, which limited demand and dragged down the pace of shipments compared with the previous month. However, the substantially fading seasonal effects and suitable weather recently are expected to accelerate the construction progress in some areas. On the macro aspect, positive signals for economic performance were released, and the manufacturing PMI index rebounded for four consecutive months to 50.2% in September. The economy is stabilizing and recovering, and downstream rigid demand is expected to pick up. To sum up, steel terminal demand may continue to improve in October.

According to SMM research, the funding status of the real estate and infrastructure industry in September basically remained stable month-on-month, with no significant improvement. Nearly 70% of funds maintained normal operations, and about 30% of surveyed companies reported that funds were in a tight situation. Most of the problems occurred in downstream repayment and fund allocation.

SMM statistics showed that 41% of the companies surveyed undertook new projects recently, and 59% were still working on old projects or were on hiatus. During the traditional peak seasons of September and October, the number of project undertakings in the downstream steel industry didn’t see obvious growth from the previous month.

At the end of August and the beginning of September, a large number of direct favorable policies were released intensively. However, according to the results of SMM tracking survey, more than 90% of the companies surveyed did not feel any obvious positive feedback, and less than 10% had optimistic expectations.

According to the current survey, feedback on the performance in September was not acceptable, and the corresponding market expectations for the next three months did not show a clear improvement. More than half of the companies still believed that there wouldn’t be much difference in market conditions from the current situation.

For October, weather disturbances diminished, so rigid demand is expected to recover. Meanwhile, considering that the Chinese government is determined to block the weakening tendency of the market economy, a strong economic signal emerged and macro-level driving forces deserved to be focused on. Based on these factors, SMM predicted that steel demand may continue to see a minor MoM growth in October.