China's steel industry remained under pressure in June as seasonal demand softened further, with industry activity staying in contraction territory amid weak domestic consumption, sluggish overseas demand, and rising inventory levels.
According to data released by the China Federation of Logistics and Purchasing (CFLP) Steel Logistics Committee, China's Steel PMI edged down 0.1 percentage point from the previous month to 47.8 in June, indicating that business conditions remained subdued after weakening in May.
Domestic and Export Demand Continue to Weaken
Demand continued to contract during June as seasonal factors weighed on downstream construction and manufacturing activity. At the same time, the slow recovery in manufacturing across major overseas economies and growing uncertainty surrounding global trade further increased pressure on China's steel exports.
The new orders index fell 0.5 percentage point month on month to 46.3, remaining firmly in contraction territory. Meanwhile, the new export orders index declined 1.8 points to 46.8, reversing the modest improvement recorded in the previous month and highlighting renewed weakness in overseas demand.
Steel Production Remains in Contraction
Under the combined pressure of weak demand and elevated production costs, steel mills continued to scale back output.
The production index rose 0.6 percentage point from May to 49.3, but remained below the 50-point threshold, indicating that overall production continued to contract despite a slight month-on-month improvement.
Meanwhile, inventory pressure intensified as finished steel accumulated more rapidly. The finished goods inventory index jumped 9.9 points to 52.9, suggesting that market absorption slowed further and inventories at steel mills continued to build.
High Raw Material Costs Limit Market Recovery
Raw material purchase prices remained at relatively high levels in June, while steel prices continued to decline. Although elevated input costs provided some support, persistent weakness in demand outweighed cost factors, keeping downward pressure on steel prices.
Outlook: Industry Expected to Remain Under Pressure in July
Looking ahead, the CFLP Steel Logistics Committee expects China's steel sector to remain under pressure in July.
Seasonal weakness in demand is likely to persist, prompting further production cuts at steel mills. Raw material prices are expected to fluctuate at high levels before easing, while steel prices are forecast to remain weak amid sluggish market fundamentals.
褰檽锟斤拷?