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China steel prices likely to hit bottom in Jan.

2015-01-04 GMT+8:00

BEIJING, Jan. 4 (Xinhua) -- Given the fact that the purchasing managers' index (PMI) tracking China's iron and steel circulation industry hit a record low in December 2014, climate for the domestic steel circulation industry in January 2015 was expected to remain weak and steel prices will likely hit bottom, according to Zhou Wei, an analyst with Lange Steel Information Research Center, a famous steel information research institute in China.

The PMI for steel circulation industry in December 2014 stood at 44.9, hitting the lowest with the sales volume index down 3.3 percentage points month on month, indicating the sluggish steel market activity.

Meanwhile, orders from downstream sectors continued shrinking with the order index down 3.1 percentage points month on month.

About 71.5 percent of enterprises polled were bearish about the market in the future. Steel traders were also reluctant to purchase more.

In December, the domestic crude steel output was estimated at about 67 million metric tons (tonnes), implying the slight increase in daily crude steel output.

The January's crude steel output was preliminarily projected to continue increasing, adding pressure to the market, said Zhou.

With the approach of the traditional Spring Festival holiday (February 18-24), demand from downstream infrastructure projects and production enterprises will become weak. Besides, the fall in prices of raw materials such as iron ore and billet will weaken cost support for steel prices. Given the above factors, prices of the domestic steel products in January will likely hit bottom, said Zhou.  (Edited by Hu Pingchao,