In August, the purchasing managers' index (PMI) of the steel sector in China’s Hebei Province decreased to 47.0 percent, down 0.4 percentage points month on month, as announced by the Hebei Province Metallurgical Industry Association (MIA). Although this means that the situation in the steel market worsened, the pace of decline was slower than that recorded by the steel sector PMI for the whole of China, which dropped by three percentage points month on month in August.
In August, the overall new order index for Hebei Province’s steel sector stood at 44.2 percent, down 3.6 percentage points compared to the previous month. In the given month, finished steel prices declined significantly, and so downstream users mostly maintained a wait-and-see stance and only purchased as needed.
In the given month, the production index for Hebei Province’s steel sector was at 49.1 percent, up 5.1 percentage points month on month. In August, though production curbs within the scope of environmental protection measures were implemented in Tangshan and Handan, the production index indicated rises.
At the same time, the inventory index for finished steel in Hebei Province increased to 48.2 percent, rising by 1.7 percentage points month on month.
In addition, the raw material inventory index for the steel sector in Hebei decreased to 42.3 percent, down 3.9 percentage points month on month. Except for coke prices which indicated rises, the prices of other raw material prices declined in August.
The Hebei Province Metallurgical Industry Association said it expects that demand for finished steel in September will improve as the month constitutes a traditional peak season for business and so market players are more bullish on the future prospects for the market. At the same time, production cuts in September to ensure clean air conditions for the 70th anniversary of the founding of the People’s Republic of China will bolster finished steel prices to some extent. However, the uncertainties from Sino-US trade frictions and the macroeconomy will also negatively affect the steel market. It is thought that finished steel prices in Hebei Province will likely edge up in September, though market players are not excessively optimistic on the prospects for the market in the coming month.