Machinery Industry Sluggish on Tight Credit

SHANGHAI, Dec. 20 (SMM) -- Overall orders at machinery plants remained weak last week, and their purchase volumes were limited as well, since plants said their cash flows were tight at year’s end. Steel prices fluctuated slightly this week, and prices in Shanghai were unchanged, while prices in other regions climbed slightly, helping the price gap between other regions and Shanghai return to the normal level.

Downstream machinery companies faced tight credit at year’s end, and some key companies said cash flows in 2011 were tighter than in past years, which has become a big problem. Construction machinery companies said their orders have not improved significantly, and their output in 2012 may decline slightly, since the positive impact from China’s move to cut the banks’ reserve requirement ratio failed to be felt by downstream enterprises. Mining machinery companies also said their orders decreased noticeably due to iron ore price drop in recent months, and the situation in 2012 will be quite grim as well. In general, downstream enterprises have not improved notably, and overall demand remained weak. Purchase volume of steel products by downstream enterprises should decline further amid cash collection at year’s end.