China’s Steel Industry Rebounds in September

China’s Steel

China’s steel purchasing managers' index (PMI) climbed 8.6 points from the previous month to reach 49 in September, signaling a halt to three months of contraction and indicating increased activity in the steel industry, according to the China Steel Logistics Professionals Committee (CSLPC). Although still below the expansionary threshold of 50, the rise suggests an improving outlook for the sector.

Steel production saw a notable boost, with the sub-index for production jumping 19.9 points to 54.8, the highest level in four years. This increase was driven by rising demand and several mills resuming production after voluntary cutbacks or maintenance shutdowns.

Steel Production on the Rise

The demand for steel typically surges in September, and this year was no different. The sub-index for new domestic orders rose 8.7 points to 47.2, reflecting stronger but still contracting demand. Despite the pickup, raw material purchase prices increased only slightly, reaching 27.7, still well below the 50-point expansion threshold.

China's broader manufacturing PMI also improved, rising by 0.7 points to 49.8, supporting the upward momentum in steel production. Industry experts predict that the October peak season will see further growth, supported by favorable fiscal policies and the easing of domestic real estate regulations. In particular, demand in the housing market is expected to rise as government measures stimulate both primary and second-hand home sales.

Looking ahead, the CSLPC expects continued production increases at steel mills in October, driven by higher anticipated demand, low inventory levels, and the potential for profits. Raw material prices are also projected to climb, while steel prices may rise moderately as old rebar standards are phased out.