China Federation of Logistics and Purchasing’s China Steel Logistics Committee announced that the Purchasing Managers Index for the Chinese Steel Sector was at 50.9 percent in May 2020, up 5.0 percentage points as compared to April as steel production in China increased further and demand from downstream users improved.

In May, the production index for the Chinese steel sector increased by 3.0 percentage points compared to the previous month to 56.4 percent. Meanwhile, in May the sub-index for new orders in the steel sector saw a rise of 13 percentage points month on month to 52.9 percent.

The new export orders index indicated a slight increase of 4.1 percentage points month on month to 31.9 percent, but was lower than 40 percent for the third consecutive month as there was no significant improvement in the coronavirus pandemic situation worldwide, and most mills preferred to sell to the local market while competition in the export market remained high.

Due to good demand from downstream users, the finished steel inventory index decreased to 29.2 percent, down 9.6 percentage points month on month.

At the same time, the purchase price index of raw materials in the Chinese steel sector stood at 68.9 percent, indicating a rise of 28.3 percentage points month on month. In May, demand for import iron ore improved amid the increasing steel production, which pushed up import iron ore prices significantly.

As for June, CSLC forecasts that steel production will decrease as the rainy season is approaching, which will reduce demand for steel, while import iron ore prices will fluctuate within a limited range at high levels.