Langer steel cloud business platform statistics released the total index of steel circulation PMI for July 2018 49.4, up 1.2 percentage points from the previous month. The 10 sub-indices that make up the PMI this month were up 7, down 2, down 1 and even. The survey results showed that the sales volume and order volume of steel circulation enterprises rose slightly in July, and the confidence of enterprises in the afternoon market improved and the willingness of market purchasing increased. It is expected that the demand of steel circulation market will recover in August.
The main features of this month’s steel circulation are as follows:
First, demand for steel procurement has picked up.
Steel turnover in July was 47.4%, up 1.1 percentage points from the previous month. The orders index rose 47.1%, up 1.1 percentage points. The sales volume and order volume of steel circulation enterprises rose for the first time after declining for three consecutive months, indicating that the purchasing demand of steel circulation links increased. Given the timeliness of the order index, the rebound in orders this month will continue to affect demand performance next month. From a regional perspective, sales and orders in central and south China rose the fastest in July, exceeding 7 percent. Then came the northeast and the northwest, where the double index rose about 3-4 percent.
Second, the iron and steel circulation market stock steady in the fall.
In July, steel social inventory destocking slowed down significantly, but the overall situation remains declining. According to the inventory sub-regional index, the inventory index of southwest and northeast China fell the most, followed by north China and central south China. In terms of the performance of supply and demand, China’s crude steel output in the first half of this year increased by 6% year on year, with an average output of 2.4926 million tons per day, an increase of 141,100 thousand tons over last year. The peak of social stock of steel circulation is 2 million tons higher than that of last year. After half a year’s digestion, the current level of social stock of steel is close to that of the same period last year.
Third, the circulation link mentality warming.
The steel market trend index rose to 50.5 in July, up 3.5 percentage points from the previous month. Influenced by the recent signals from the central government, such as expanding domestic demand, increasing investment, and hopefully easing monetary policy, the steel circulation has significantly improved the expectation of the economy and demand in the second half of the year due to the combination of supply side environmental factors and low consumption of social inventory. The purchasing intention index for July was 49.0, up 1.4 percentage points from the previous month, indicating that steel circulation enterprises are more willing to purchase steel from steel producers or agents at the next level.
For the steel market in August, the normalized and stricter environmental production restriction to a certain extent restrains and regulates the pace of supply release. The inventory destocking performance under high yield is still good, indicating that steel demand is not weak at present. Considering that the autumn and winter of this year is still likely to issue the same period of production restrictions last year, we will not rule out the possibility of early overdraft of demand and move closer to the release of the third quarter. Steel exports have also been stronger than expected, rising month by month since January this year. By June this year, they had basically recovered to the same level as last year.
On the macro level, policies improve marginal demand expectations. On July 23, the commission proposed a more proactive fiscal policy, maintaining an appropriate scale of social financing and adequate liquidity, providing a targeted boost to this year’s weak infrastructure sector and improving the marginal demand for steel. At the same time, according to the half-year data released by the government, the downstream performance of steel, such as real estate, automobile, machinery and shipbuilding, is relatively good, and the overall demand in the third quarter is expected to remain weak. In July, the sales volume and order volume of steel circulation enterprises recovered slightly, the confidence of enterprises in the afternoon market improved, and the willingness to purchase in the market increased. It is expected that the demand of steel circulation market will recover in August.
Post time: Aug-02-2018