Home > News > October steel PMI rose 0.1%, the steel market will continue to oscillate upstream.

October steel PMI rose 0.1%, the steel market will continue to oscillate upstream.

On October 31, the steel industry PMI data surveyed and released by the China Federation of Things and Steel Logistics Committee showed that in October was 52.1%, up 0.1% from the previous month. In the main sub-index, production index, new order index, backlog order index and purchasing volume index all increased, and finished product inventory index decreased significantly. PMI shows that with the approaching of limited production season, major steel enterprises are rushing to production, while winter is approaching, some infrastructure facilities are also rushing to meet the deadline, resulting in rapid increase in demand in the short term, rising supply and demand led to the increase of enterprise purchasing volume and backlog orders, while steel factory finished product inventory consumption has accelerated.

Demand is picking up and production is booming.

Before the production season is approaching, major steel enterprises seize the time to start work, driving steel production in October to continue to maintain vigorous. The production index is 55.7%, a rise of 2.1%.

According to the statistics of the China Steel Association, the average daily output of crude steel in the member steel enterprises in early October was 198.74 million tons, an increase of 0.13% by 0.26 million tons in the ten-day cycle, and the estimated daily output was 2.5214 million tons nationwide, with a rise of 0.08% by 0.21 million tons in the ten-day cycle. Driven by vigorous production, raw material procurement has increased and inventory consumption has been speeded up. The raw material purchasing volume index was 61.8% in October, up 4.9% from the previous month, while the raw material import index was 56.6%, up 5.9% from the previous month. The stock index of raw materials was 54.2%, a decrease of 3.8%.

In October, domestic steel market demand rebounded, the new order index was 52.3%, and the annulus ratio rose by 3.4%. The new export orders index was 47.3%, a rise of 0.8%. According to the monitoring data of snail terminal purchase in Shanghai stock market, the daily average purchasing volume of snail terminal in Shanghai stock market rose 32.63% in October, which was significantly higher than the previous few months.

Xu Liying of Lange Iron and Steel Research Center told China Securities News that the regional differentiation of sales volume index and order index of steel circulation enterprises was obvious in October. As the northern region entered winter, especially the northeast region was about to enter a freezing period, the demand for purchasing dropped significantly, with the northeast region sales index down 4.7%, the order index. The number slipped by 4.3%. However, the sales and orders index in the South showed a rebound, with the double index in the south, southwest and northwest rising between 0.3% and 1.1%. As the climate turns cold, regional procurement demand will continue to differentiate in the future, and the phenomenon of "north timber coming down south" will become the main direction of steel circulation.

Xu Li Ying believes that the tight supply and demand balance of the steel industry will continue in November, environmental pressure, elastic boundary and strict supervision, there is a trend of continued contraction. Variety needs continue to differentiate, and construction steel is stronger than steel for manufacturing. Affected by climate factors, the regional differentiation between the north and the South will also be more significant, the future market expectations of enterprises will weaken, and the market demand for steel circulation is expected to continue to be under pressure in November.

Aftermarket steel prices are expected to shock upward

Before the production season comes, many downstream enterprises are facing a double test of rush time and stock, so strong willingness to buy, resulting in a substantial reduction in finished product stocks in steel mills. In October, the finished goods inventory index was 42.3%, a sharp decrease of 11.4% in the ring ratio.

As part of the enterprise stocking stage, and there is no rush to put into use, so that social inventories have increased. According to statistics of the China Steel Association, in October 2018, the total social stock of five major types of steel products in 20 cities in China was 9.4 million tons, up 0.8% from 70,000 tons, including 8.52 million tons in the steel market, up 0.08% from 0.5 million tons in the year-to-year period, 870,000 tons in the port and 67,000 tons in the year-to-year period, up 8.3%. This month, the five major varieties of steel social inventory has risen and fallen, including hot rolled coil inventory rose by 7.1%, cold rolled coil inventory by 3.0%, plate inventory by 7.4%, wire stock by 8.2%, screw steel inventory by 2.7%.

In October, domestic steel prices continued to rise. Zhuo steel chain data show that on October 8, the Shanghai rebar index was 4560.3 yuan / ton, to October 29, the Shanghai rebar index rose to 4702.8 yuan / ton, the highest level so far this year. The main reasons are as follows: firstly, steel plant inventory is at a low level, which has a certain support for steel prices; secondly, the rise of raw material prices has a certain support for steel prices; thirdly, infrastructure investment has the possibility of further stabilization, which is conducive to stabilizing the steel market demand.

Since October, Shanxi, Tianjin, Inner Mongolia, Hebei and most other northern regions have introduced the autumn and winter production restriction program. On October 26, the Shandong Economic and Information Commission and the Environmental Protection Department jointly issued a "Notice on Organizing and Implementing Differentiated Crosspeak Production in Autumn and Winter of the Key Industries from 2018 to 2019", which calls for steel, coking and foundry enterprises in Jinan, Zibo, Jining, Dezhou, Liaocheng, Binzhou and Heze in seven corridor cities from 2011 to 2018. From 15 to March 15, 2019, we took the production of staggering peak. Municipalities may appropriately prolong or shorten peak-crossing production time according to air quality, but the implementation time of peak-crossing production shall not be less than 2 months, and must include December 2018 and January 2019. With the implementation of the policy of limiting production, the supply level will also be reduced, so as to provide certain support for price.

According to the PMI report, production continued to rise in October, downstream demand increased significantly in the short term, backlog orders also rose, and steel prices continued to rise. With the coming of production restriction policy, the situation of supply less than demand is unavoidable, and the cost of raw materials increases, steel prices will be supported at a high level under a series of factors, and steel prices may still show an upward trend in the future. (source: China Certification Network)
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