Platts China Steel Sentiment Index slumps to 8.93 points in November


The for China’s steel slumped to its second-lowest level to date in 2019 for November, with mills and anticipating weak orders and steel prices over the next month, the latest S&P Global Platts China Steel Index, or CSSI, has found.

The November CSSI showed a headline reading of just 8.93 out of 100 points, down from 16.04 points in October, and second only to the 8.42 recorded in June.

The headline CSSI, which monitors the outlook for steel orders over the coming month, has averaged just 22.05 over January-November, compared with 40.05 in the same period last year.

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The outlook for steel prices fell by 9.14 points from October to just 18.42 in November, an indication that few index participants saw much price upside given current market conditions.

A reading above 50 indicates expectations of an increase/expansion and a reading below 50 indicates a decrease/contraction. The CSSI is based on a survey of around 50 China-based traders and steel mills.

The outlook for steel production was largely steady on month at 55.26, compared with 55.00 in October. One large steel company said it planned to lower output in winter in anticipation of weaker demand.

More steel market participants thought steel would decline in November compared with last month. in October was slower due to the National Day holiday period, which is why steel stocks climbed. However, November’s reading of 60.53 for steel inventories is still considered high and suggests there could be downward pressure on steel prices.

Mill sources said the strength or otherwise of the steel market over the remainder of 2019 depended on government policies around winter steel production cuts and stimulus measures.

They also noted that China was entering the seasonally slower time of year when activity winds down due to colder weather, crimping demand for steel.

Most mills expected winter output cuts to be fairly light given the softness of the economy, but said demand would also likely be subdued.

China’s Lunar New Year holiday in 2020 falls earlier than normal on January 25 and should trigger some restocking of both steel and raw materials beforehand. Until then, market conditions are likely to be weak, sources said.

(Corrects figure in headline)

— Paul Bartholomew,

— Analyst Jing Zhang,

— Analyst Crystal Hao,

— Analyst Sylvia Cao,

— Edited by Wendy ,

Source: Platts


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