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June PMI index of the domestic steel industry was 45.1%, down 1% from May

June PMI index of the domestic steel industry was 45.1%, down 1% from May

Issue Time:2021-07-15
In June PMI index of the domestic steel industry was 45.1%, a decrease of 1.0 percentage point from the previous month. Changes in the sub-indices show that market demand has slowed down, which has weakened the supporting role of the industry. The growth rate of steel production remained in the expansion range, and the contradiction between supply and demand increased.
The report predicts that market demand will continue to be tight in July, steel prices will fluctuate weakly, raw material prices still have room for growth, and steel mills’ production growth may continue to decline.
The report pointed out that the new order index in June was 34.8%, a decrease of 4.6 percentage points from the previous month, and a decrease of 11.6 percentage points from the same period last year. The steel market demand continued to shrink rapidly on the basis of the tightening last month.
There are several reasons. One is that June is the traditional low season for steel market demand, and market demand is under pressure; the second is the rebound of the epidemic in some parts of the country during the month, which has a certain impact on the steel market demand in the region; the third is the price of steel in the early stage. Continued to be high, the restraining effect on the terminal market continued to some extent.
In addition, after the launch of the steel export tax rebate cancellation policy, domestic steel exports have shown a continuous downward trend. The new export order index was 42.3%, down 1.6 percentage points from the previous month, and stayed below 45% for the second consecutive month.
In terms of steel production, the overall upward trend continued. The production index was 50.7%, a decrease of 0.7 percentage points from the previous month and remained in the expansion range. According to statistics from the China Iron and Steel Association, in early June, the key statistical iron and steel enterprises produced 2,335,300 tons of crude steel and 2,022,400 tons of pig iron per day. In the middle of the month, the daily output of crude steel was 2.3954 million tons and pig iron was 2.0661 million tons, which was basically the same as the same period last month. In the second half of the year, some areas began to stop production and limited production, coupled with poor downstream demand, many steel plants took the opportunity to carry out blast furnace maintenance. The report predicts that steel production in June will drop slightly from the previous month, but the decline will be significantly smaller than the demand side decline.
Steel prices fluctuated and closed slightly during the month. In June, the steel market continued to maintain a situation of oversupply, the gap between supply and demand widened, and the demand for price support weakened. However, the speculation factors expected to limit production within the month supported the price. Under the combined effect of the two factors, the price of steel fluctuated. run.   
It is worth noting that the growth rate of raw material prices has dropped significantly, and the cost pressure of enterprises still exists. In the first half of June, driven by hype factors and monetary easing policies of major countries, the prices of raw materials in the steel industry rose rapidly. Take the main raw material iron ore as an example. In early June, the price of iron ore stopped falling and rebounded. On June 15th, the 62% iron ore index reached a maximum of US$222.35/ton, a rebound of over 20% from the lowest point at the end of May, which was significantly higher. The price of steel increased.
The report finally pointed out that due to the slowdown in market demand, weaker momentum for steel prices and high raw material cost prices, steel mills’ production growth rate may continue to decline. At present, steel mills have reduced their production capacity through active maintenance. However, compared with the demand-side situation, production is still at a high level, and the contradiction between supply and demand still exists.
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