SHANGHAI, Oct. 27 (SMM) -- The Steelease PMI was 46.23% during October 2011, down 0.5% MoM, indicating the climate of steel downstream industries continued to slip.

Tight credit greatly restricted production and orders in steel downstream industries in October. Meanwhile, China’s tightening monetary policy and determination to curb property sector also to some extent prevented downstream industries from improving. In addition, the global economic slowdown had negative effect on China’s exports of machinery products, automobile, home appliance, hardware products and other commodities. According to sub-indicators, the composite production index and composite new order index remained below 50%, suggesting overall steel downstream industries continued to contract amid bearish macro economic environment. The composite index of raw material inventory has been lower than 50% since March 2011, indicating downstream enterprises generally made purchases on an as-needed basis.

Steelease believes steel downstream industries will not improve unless China eases monetary policy in the future.