The Purchasing Managers' Index (PMI) in China's steel sector, an economic indicator for the industry, fell to 48.4 in March, after returning to expansion territory in February for the first time since May 2020, according to the latest data released by the China Steel Logistics Professionals Committee (CSLPC).
It was down 1.7 compared with the preceding month, ending a three-straight-month increase, data showed.
Steel production kept rising with improved production environment and rigid demand to meet continued resumption of downstream activities. The index for production gained 0.7 month on month to 51.8 in March, marking fifth straight month of increase.
The new order index was 50.2, a 1.3 increase from a month earlier, with the index climbing for four months in a row and for the first time it reached expansion territory in nearly two years.
In March, some projects were steadily pushed forward and construction activities also warmed up amid the optimized COVID controls and the fading cold weather, driving domestic consumption of steel products.
However, the recovery of steel usage remained lower than expected and still lacked strong strength in March.
Participants' output for the near-term demand of finished steel retreated, which, coupled with high iron ore prices and contracted margins, resulted in a prudence material-building strategy at mills. The index for raw material index stood at 38.2% in March, down 13.2 from the previous month.
CSLPC expects steel demand in April to continue to recover and production may moderately increase. Prices of iron ore may retreat, limiting the likelihood for a strong rally in steel prices.
(Writing by Emma Yang Editing by Harry Huo)
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