Steel downstream activity grows slower in May

SHANGHAI, May 30 (SMM) – Activity across major steel downstream industries in China continued to expand in May, but at a slower pace due to a high base of comparison in April.

Construction remained in a high season, while manufacturing showed signs of weakening as the machinery and automobile sectors contracted.

The SMM purchasing managers’ index (PMI) for China’s construction, machinery, automobile, shipbuilding, home appliance and transportation sectors, major consumers of steel, slipped 7.86 from April to 51.1 in May. It remained above the 50-mark that separates expansion from contraction, for a third straight month. May’s reading inched up 0.13 year on year.

After seasonal adjustment, the composite PMI came in at 51.26, down 2.8 from a month ago and 0.08 from a year ago.

Production this month grew across steel downstream sectors, except for machinery and automobiles, with the sub-index standing at 51.81, down 15.1 from April and 1.68 from May 2018. Rainfall is expected to impact construction and transportation next month.

The sub-index for new orders slipped 12.98 to 52.16 in May, standing 2.15 higher than a year earlier. Overall new orders increased this month, but orders for machineries, automobiles and home appliances shrank as a low season approaches. New orders sub-index for the automobile sector fell 6.1 to 44.8 in May.