Growth in demand for rolled metal products in China is expected

The China Purchasing Managers Index, or PMI, rose 1.1 basis points in April from March to 51.7, according to the latest statement from the CFLP Steel Logistics Professional Committee's index compiler.

The index holds above 50 points for the second month in a row. The April index shows that China's steel sector enjoyed strong gains during the month on the back of higher orders and lower inventories.

Steel prices in China are set to rise in May as construction of fixed-asset investment projects begins within the month, boosting end-user demand, the CFLP said.

Meanwhile, the supply of rolled metal can only be met to some extent as the central government continues its efforts to protect the environment, eliminate overcapacity and prevent the restart of “illegal” blast furnace production.

The steel production sub-index rose 0.7 basis points from March to 51.3 in April, reflecting a slight increase in total steel production in China. The operation of blast furnaces increased slightly after capacity cuts during the heating season ended in northern China. However, many factories in Handan, Xuzhou and Linfen were doing maintenance in April for environmental reasons, limiting overall production growth.