Steel downstream PMI rises to 48.77 in Jan

SHANGHAI, Jan 30 (SMM) – As Chinese New Year approached, activity across major steel downstream industries in China continued to contract in January.

SMM purchasing managers’ index (PMI) for China’s construction, machinery, automobile, shipbuilding, home appliance and transportation sectors, major consumers of steel, stood at 48.77 in January, up 3.37 month on month and 0.78 year on year. A reading above 50 indicates expansion while one below 50 signals contraction.

After seasonal adjustment, the composite PMI came in at 51.76, up 1.83 from a month ago and 0.9 from a year ago. Excluding seasonal impact, steel downstream industries expanded this month, suggesting that demand for steel was not as weak as expected.

Production continued to shrink in January, with the sub-index climbing 7.18 from December to 47.54, due to a lower statistical base a month earlier.

With the CNY holiday around the corner, construction sites across the country prepared for operation suspension. Most construction sites told SMM that they would resume operation after the 15th day of the first lunar month which is scheduled on February 19. SMM expects operation across construction sites to recover to normal in March.

The sub-index for new orders increased by 5.45 month on month and 3.07 year on year to 49.09 in January. Orders that entered the construction, automobile and shipbuilding sectors declined this month, while orders across machinery, home appliances and transportation expanded slightly.