The latest report released by the Specialized Committee on Steel Logistics of the China Federation of Logistics and Purchasing shows that the steel industry’s PMI for January was 46.6%, an increase of 2.3 percentage points from the previous month, marking a strong start to the year. It is expected that in February, driven by factors such as the continued easing of pandemic impacts and the resumption of production and work following the Spring Festival, demand in the steel market will continue to rebound, steel mill production will remain on an upward trend, and steel prices are likely to fluctuate and strengthen.
　　In January, steel demand showed an overall trend of stabilization and recovery, steel mills maintained stable production growth, product inventories rose somewhat, and both steel and raw material prices strengthened. On the demand side, although steel consumption during the Spring Festival holiday was relatively weak, thanks to the effective implementation of optimized COVID-19 prevention and control measures across various regions, market expectations for a strong rebound in steel demand after the holiday were robust. As a result, winter stockpiling demand for steel eased somewhat, providing solid support for overall steel demand. In January, the new orders index came in at 43.9%, up 5 percentage points from the previous month, indicating that the steel market as a whole continued its trend of stabilization and recovery. On the production side, driven by factors such as the release of winter stockpiling demand and rising business expectations for the future, steel mills stepped up their production efforts despite tight labor supplies, achieving steady growth in output. At the same time, steel mills also increased their efforts to build up finished-product inventories, leading to a rise in enterprise stock levels.
　　In terms of prices, in January, steel prices showed a volatile yet strengthening trend amid expectations of improvement; raw material prices also rose, putting upward pressure on steel mills' costs. By product category, raw materials such as iron ore and coke all experienced price increases to varying degrees, thereby intensifying cost pressures on enterprises to some extent.
　　The report states that, overall, after the impact of the pandemic continues to wane, China’s economy has demonstrated strong endogenous momentum, and the steel industry has also shown considerable resilience and promising prospects. However, it is important to recognize that although the steel industry has experienced some recovery at present, this rebound is largely a bottom-up recovery achieved on the basis of the previous sustained slowdown in growth rates; the industry remains in a recovery phase.
　　The report forecasts that in February, demand in the steel market will continue to rebound, steel mill production will keep rising, and steel prices are likely to maintain their upward trend. Iron ore prices also have some room for a slight increase. Currently, iron ore prices have broken through a new high in nearly half a year. Although China’s “Foundation Plan” is gradually being implemented domestically, given the markedly improved demand outlook, it will be difficult for iron ore prices to remain low. It is expected that raw material prices in February will rise in tandem with steel prices. (China Industry Economy Information Network)