Steel Plate Demand Remains Weak on Weaker Machinery Industry

SHANGHAI, Dec. 6 (SMM) -- Last week, orders received by machinery plants were weaker than the previous week, with purchasing volumes decreasing as well. Steel prices were little changed last week, and although the People’s Bank of China (PBOC) cut the banks’ reserve requirement ratio (RRR), machinery plants were still little interested in purchases. Purchase prices for steel products offered by machinery companies were unchanged from a week earlier.

Machinery plants said most cash flows are still tied up by the payment for steel mills and bank loans. Construction machinery plants said orders for the remainder of 2011 have not improved, and some plants even reported weaker orders. Planned output at some large enterprises may fall by one third in 2012, leaving severe situation. Some machinery plants said whether or not China’s RRR cut will be favorable for the development of machinery industry remains unknown since the direction of China’s investment is unclear, so their purchase plans will be unchanged in the short term. But these plants also believe that their attitude may change if China continues to ease monetary policy in the future.

In summary, Steelease believes purchasing volumes by machinery plants may increase slightly in the short term, but the recovery of steel demand still needs further support from national policies in the medium and long term.