China PMI drops to 36 in February due to coronavirus impact

The CFLP Steel Logistics Professional Committee announced that the China Steel Purchasing Managers Index fell 10.5 basis points from January to 36.6 in February, as the coronavirus impacted refining demand, leading to an increase in finished steel inventories. The sub-index for steel production in February was 15.4 basis points lower than in January at 31.3.

The raw material stocks sub-index fell to 29.2, indicating a rapid decline in stocks when procurement becomes difficult. Meanwhile, the sub-index for new orders from steel mills stood at 32.7 in February, down 11.1 basis points from the previous month. Declining end-user demand and delayed construction activities are driving down new orders. The steel stocks sub-index rose 12.2 basis points from January to 57.5 in February.

It said: "Looking ahead in March, the demand for rolled steel is likely to start recovering, but the accumulated steel inventories will put pressure on steel prices."