Home / Metal News / Copper / Recovery in Downstream Steel Demand Below Market Expectations
Recovery in Downstream Steel Demand Below Market Expectations
Mar 29,2013 11:04CST
smm insight
Source:SMM
Based on the latest Steelease survey results, the Composite Steel PMI so far in March was 56.13, up sharply by 6.69 MoM, but still down 0.38 YoY.

SHANGHAI, Mar. 29 (SMM) -- Based on the latest Steelease survey results, the Composite Steel PMI so far in March was 56.13, up sharply by 6.69 MoM, but still down 0.38 YoY. Steelease believes the recovery in downstream steel downstream was below market expectations and that steel prices will fall during April for three reasons.

First, March's PMI over 50 was more a factor of a seasonal recovery than long-term trend. Warmer weather has pushed up operating rates at construction sites in north China, which helped boost March’s PMI. During the month, the production index at construction sites was 66.12, up 22.30 MoM, while the production index in transportation sector was also high at 60.61, up 6.63 MoM. Both of these strong gains were more a result of seasonal resumption of operations as weather improves.

Second, the steel downstream composite index during February 2012, the first month after last year’s Chinese New Year holiday was 57.71, but was also high during March 2012 at 56.51. Both readings were higher than this year’s March figure of 56.13, the first month after this year’s Chinese New Year holiday, so March’s recovery was lower both in terms of a MoM and a seasonal factor comparison. Looking back even further, the steel downstream composite index in March 2010 and March 2011 was 63.86 and 62.25, both higher than March 2013, which also indicates a slower recovery than past years. 

Third, the new orders sub-index for March was 55.78, the first post-holiday month below 60 in four years. The new orders index is a strong indicator of operating rates, purchasing volumes, and raw material inventories, so the decline may indicate a slowing recovery.

In general, the higher PMI for March is more from a seasonal recovery and should be considered weak when considering the new orders index and when comparing with historical readings. Although crude steel output remains high, Steelease believes steel prices will decline during April.
 

Steel PMI

For queries, please contact Frank LIU at liuxiaolei@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn

Related news

    timeApr 28, 2020 21:34timezoneCST
    timeApr 28, 2020 19:42timezoneCST
    timeApr 28, 2020 19:34timezoneCST
    timeApr 28, 2020 18:54timezoneCST
    timeApr 28, 2020 18:13timezoneCST
    timeApr 28, 2020 18:13timezoneCST
    timeApr 28, 2020 17:54timezoneCST
    timeApr 28, 2020 18:24timezoneCST
    timeApr 28, 2020 16:51timezoneCST
    timeApr 28, 2020 16:38timezoneCST