SHANGHAI Sentiment weakened in Chinas steel market
after activity in the countrys manufacturing sector
dropped to its lowest level in seven months, according to
preliminary data released Feb. 20 by HSBC Holdings Plcs
China purchasing managers index (PMI).
The banks flash PMI for February stood at 48.3 points,
down from a final reading of 49.5 points in January. A reading
below 50 points indicates a contraction in manufacturing
Februarys flash reading of the HSBC China
manufacturing PMI moderated further as new orders and
production contracted, reflecting the renewed destocking
activities. The building-up of disinflationary pressures
implies that the underlying momentum for manufacturing growth
could be weakening, Qu Hongbin, HSBCs chief
economist for China, said.
We believe Beijing policymakers should and can fine-tune
policy to keep growth at a steady pace in the coming
year, he said.
The continuous slowdown in the manufacturing sector could
further erode steel market confidence amid the persistently
high output and subdued demand, market participants predicted.
Sentiment is already weak, as end-user demand has shown
no signs of revival after the weeklong Chinese New Year
holidays. Im afraid the negative economic data could put
more pressure on the fragile spot market, a
Shanghai-based trading source told AMM sister
publication Steel First.
A recovery in steel prices before the end of the month is
unlikely in the absence of any momentum, according to a
All the key indicators, including daily crude steel
output, finished steel inventory, as well as the PMI are
negative so far, and dealers are facing tighter liquidity at
month-end, so there is still downside risk for prices, he
A version of this article was first published in AMM sister
publication Metal Bulletin.