Downstream Industries Recover, Raw Material Buying Still Quiet -Shanghai Metals Market

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Downstream Industries Recover, Raw Material Buying Still Quiet

SMM Insight 03:51:42PM Feb 27, 2012 Source:SMM

SHANGHAI, Feb. 27 (SMM) -- According to a Steelease survey, the composite PMI for steel downstream industries was 57.71 during February 2012, up 17.21% MoM, and up 0.31% YoY. The PMI for steel downstream industries improved from January, since the Chinese New Year holiday in January affected production and orders in most industries. In addition, the PMI for steel downstream industries has been very low after slipping for five consecutive months, and the index returning above 50 in February was within expectations. In this context, Steelease believes the rebound in the PMI does not mean the complete recovery of downstream demand, with the demand outlook remaining to be seen.

The composite production and new order indexes were above 60, indicating operating rates and new orders in all surveyed downstream industries improved significantly. However, the composite index for raw material inventory was only 41.32, showing enterprises were reluctant to purchase raw materials because of liquidity shortages and pessimism toward industry outlook.

Cash liquidity remained tight in China, and although the People’s Bank of China cut the banks’ reserve requirement ratio in February, any positive impact on steel downstream industries has not been felt yet. Steelease believes the recovery of overall steel downstream industries still needs support from the Chinese government’s policies.

 

Key Words:  steel 

Downstream Industries Recover, Raw Material Buying Still Quiet

SMM Insight 03:51:42PM Feb 27, 2012 Source:SMM

SHANGHAI, Feb. 27 (SMM) -- According to a Steelease survey, the composite PMI for steel downstream industries was 57.71 during February 2012, up 17.21% MoM, and up 0.31% YoY. The PMI for steel downstream industries improved from January, since the Chinese New Year holiday in January affected production and orders in most industries. In addition, the PMI for steel downstream industries has been very low after slipping for five consecutive months, and the index returning above 50 in February was within expectations. In this context, Steelease believes the rebound in the PMI does not mean the complete recovery of downstream demand, with the demand outlook remaining to be seen.

The composite production and new order indexes were above 60, indicating operating rates and new orders in all surveyed downstream industries improved significantly. However, the composite index for raw material inventory was only 41.32, showing enterprises were reluctant to purchase raw materials because of liquidity shortages and pessimism toward industry outlook.

Cash liquidity remained tight in China, and although the People’s Bank of China cut the banks’ reserve requirement ratio in February, any positive impact on steel downstream industries has not been felt yet. Steelease believes the recovery of overall steel downstream industries still needs support from the Chinese government’s policies.

 

Key Words:  steel