The Domestic Steel PMI Index Was 47.5%in January: A Good Start Was Achieved, And Steel Prices Were Stable. (PPGI Steel Sheet)
On January 30, the China IoT Steel Logistics Professional Committee released the latest report. In January 2022, the domestic steel PMI index was 47.5%, an increase of 8.8 percentage points from the previous month, and the steel market boom has rebounded. The sub-indices show that the steel industry made a good start in January. With rising steel production and purchasing activities, corporate expectations are more optimistic. In addition, the demand for winter storage release, the overall steel inventory have increased, and the market price has been relatively stable.
However, the report pointed out that the overall market demand is still insufficient, and the price of raw materials has risen rapidly in the short term. Therefore, it expects that steel mills' production may decline in February, demand tends to improve, and prices have a specific room for recovery.
Regarding the reasons for the recovery of steel production, the report mentioned that in January 2022, many ministries and commissions issued policies related to stable growth, which brought better expectations to the market. The strength is relaxed. According to data from the China Iron and Steel Association, as of mid-January, the daily output of pig iron was 1.7507 million tons, an increase of 1.10% from the previous month; the daily output of steel was 190.29%, an increase of 1.86% from the previous month.
While the production side is picking up, as the temperature continues to drop and the Spring Festival holiday is approaching, the overall demand side of the steel market shows a shrinking trend. The report mentioned that the new order index in January 2022 was 40.6%, which continued to be below 50%, indicating that the overall tight demand continued. However, from the perspective of market transactions, the demands of steel traders and end-use steel parties are differentiated.
Despite the rebound in supply and tight demand, steel prices did not decline in January 2022. According to the data of Zhuo Steel Chain, the price on January 6 was the highest of 4,743 yuan/ton this month, the lowest price on the 18th was 4,670 yuan/ton, and the maximum amplitude was only 73 yuan/ton.
According to the report's analysis, the stability of steel prices may support by two reasons. First, the rising cost of raw materials has a supporting role in promoting steel prices. The macro-policy support drives up market expectations and boosts market prices.
