China's Steel Sector Sees Significant Uptick in September

China's Steel

In September, China's steel purchasing managers' index (PMI) saw a sharp rise of 8.6 points compared to the previous month, reaching a level of 49, as reported by the China Steel Logistics Professionals Committee (CSLPC). This increase marks the end of a three-month contraction, reflecting renewed activity in the steel industry. Despite remaining below the 50-point threshold that signals expansion, the upward shift points to improving conditions for steel producers.

The production sub-index jumped significantly by 19.9 points to hit 54.8, the highest figure seen in the past four years. This growth was propelled by strong domestic demand and the restart of production at mills that had previously reduced output for maintenance or operational reasons.

Demand Trends and Future Outlook

September is traditionally a peak season for steel demand, and this year followed the usual trend. The sub-index for new domestic orders rose by 8.7 points to 47.2, showing strengthening demand, albeit still within contraction territory. Meanwhile, raw material prices saw a slight uptick, with the index for raw material purchases climbing 8.1 points to 27.7, still below the level required to indicate growth.

Additionally, China's overall manufacturing PMI improved by 0.7 points, reaching 49.8, further supporting optimism within the steel sector. Experts anticipate even stronger activity in October, buoyed by supportive fiscal measures and relaxed real estate policies, which are expected to drive up housing demand.

Looking forward, the CSLPC forecasts a continued rise in steel production through October, driven by increased demand, low stock levels, and favorable profit margins. Steel prices are likely to see a modest increase, as outdated rebar standards are gradually phased out, while raw material costs are expected to rise in line with production growth.