February steel PMI rebounded for ten consecutive months under the line
According to the index report released by the China Federation of Iron and Steel Logistics Professional Committee on the 1st, the domestic steel industry PMI index was 45.1% in February, up 2.1 percentage points from the previous month, the highest value in the past four months, showing steel The overall situation of the industry has improved slightly. However, this index has been below the 50% stagnation line for 10 consecutive months, and the downturn in the industry continues.
According to analysis, in the main sub-indices in February, the production index was unchanged from the previous month, the new order index and the new export order index bottomed out, and the finished product inventory index fell slightly. These indicate that the overall supply and demand situation of the current steel industry is higher. The improvement in the early stage, coupled with policy easing expectations and seasonal factors, the steel market kinetic energy is gradually gathering.
However, due to the significant increase in social stocks during the Spring Festival, the large-scale rain and snow weather in the country after the Spring Festival has delayed the construction of the project, and the short-term steel price weakness will continue.
The cost support of the steel industry is also slightly stronger than before. After falling for three consecutive months, the purchase price index bottomed out in February, up 6.3 percentage points from the January to 29.8%. However, this index is still relatively low, indicating that the current raw material market is still operating at a low level, and the support for the steel market is not strong. Judging from the situation in recent years, during the period after the Spring Festival, the prices of raw materials have basically fallen and increased. In particular, since 2014, the demand for steel terminals has been hard to see, and the supply of raw materials is relatively loose. The weak pattern is difficult to change in the short term. If the iron ore price falls further below $60 per ton, more non-mainstream mines and domestic mines will be discontinued, and later ore prices are expected to be supported by the bottom.
According to the relevant index report, due to the sharp increase in market inventory and steel mill inventory during the Spring Festival, the contradiction between oversupply in the steel market will become sharp in the short term, and the cost support will remain insufficient, and steel prices will still be consolidating at the bottom. However, starting from mid-March, downstream demand will gradually start, policy loosening and seasonal peak season factors may partially resolve the contradiction between supply and demand, and the demand side is expected to bring a certain boost effect to the steel market with a long period of downturn.