Steel PMI for January Upbeat

SHANGHAI, Jan. 30 (SMM) - According to a recent Steelease survey, steel downstream PMI in January 2013 was 50.93%, hitting a near-year-January high. PMI is generally low in January, in which period operating rates at building sites are the lowest in the year. January PMI in 2011 and 2012 was below 50, while the index in January 2010 was only 50.50%. Steelease believes the upbeat PMI in January 2013 signals China's downstream demand for steel sector will be better than 2012.

Steelease believes the improving manufacturing in January is due mainly to infrastructure investments by the government, and increasing new orders in response to recovering economy and expanding consumption. The comprehensive new order index in January hit 52.72%, up 1.09 MoM, and up 10.02 YoY.

Besides, the release of major economic data and increasing new orders caused optimism in most industries, and this allowed them to replenish stocks actively. The comprehensive raw material inventory index was 54.62, up 7.94 MoM, and up 4.97 YoY. That shows the months of raw material depletion have come to an end. In addition, comprehensive finished-product inventory index was 51.24, up 0.32 YoY, and up 0.80 MoM. Downstream enterprises began to produce finished-product inventories, which also shows improving confidence at downstream producers.

According to Steelease statistics, there are 19 provinces setting their fixed-assets investments target at or above 20% in 2013, with Xinjiang, Gansu, Guizhou and Heilongjiang province setting the target at or above 30%. Steelease believes investments should be boosted further by policies in the next few months, and this will be reflected in PMI after the Chinese New Year holiday, and the growth of fixed-assets investments. Overall, Steelease anticipates the growth of annual fixed-assets investments in 2013 will be higher than 2012, and downstream demand for steel will be also stronger than 2012.