SHANGHAI, Jun 29 (SMM) – The low season for China’s steel industry set in in June as high temperatures, rainy weather and environmental scrutiny affected production in the downstream industries. The shipbuilding sector, however, continued to expand.
The steel purchasing managers’ index (PMI) in June stood at 46.57, down 4.39 from May and down 0.36 from a year earlier, according to SMM’s Steel PMI Monthly report published on Thursday June 28.
Seasonally adjusted, the steel PMI was 52.53, up 0.72 on the month but down 0.44 on the year.
While the low season drove the steel PMI below 50, demand appeared relatively robust excluding the seasonal factor.
The production index stood at 43.74 in June, down 9.75 from May and down 2.07 year on year, as high temperatures in the rainy season and environmental issues hurt downstream production. The onset of the low season drove the index for new orders down 6.31 on the month and 0.06 on the year to 43.71, although orders in the shipbuilding industry grew further.
The construction industry beefed up production in June, while the adverse weather and environmental checks impeded work at some sites. SMM expects production in the construction sector to drop in July.
With the exception of excavators, the machinery industry saw orders dip further in the low season. Machinery producers will close during July-August due to high temperatures.
Most producers of passenger and commercial vehicles and supporting facilities curtailed purchases of raw materials as the low season weakened new orders.
Some shipbuilders stepped up production as new orders picked up across shipyards. Most shipbuilders purchased as required.
Producers of home appliances increased finished-product inventory as they promoted sales in the summer, but will slow production during the low season.
The transportation industry weakened in June and some public-private partnership (PPP) projects remained suspended. These producers kept inventory low.
For more details on China’s steel downstream industries, please refer to SMM China Steel PMI Monthly.