Platts China Steel Sentiment Index Remains at Low Level in January

BEIJING, Jan. 14, 2016 /PRNewswire/ -- Chinese steel market participants expect new orders to remain subdued over January, though they see some improvement in price levels for both long and flat steel products, according to the latest Platts China Steel Sentiment Index (CSSI).

The headline index for January edged up 1.62 points from the month before to 24.45 out of a possible 100 points and was the fourth-consecutive month the reading has stayed below the 50 threshold. A reading above 50 indicates an increase/expansion and a reading below 50 indicates a decrease/contraction.

The outlook for new export orders over the coming month improved by almost 10 points compared to December to 34.03, while expectations for new domestic orders were flat versus the month before at 23.62.

Price expectations for flat steel products, such as hot rolled coil, rebounded by 38.34 points to 56.07 in January, and the price outlook for long steel products, such as rebar, soared 71.53 points to 77.78.

"The index results indicate a disconnect between expectations for new steel orders and the outlook for price levels," said Paul Bartholomew, Platts senior managing editor, steel & raw materials. "Market participants are more upbeat about prices since they began to improve from mid-December, but they are less confident about domestic and overseas demand."

Platts China Steel Sentiment Index – January 2016
(a figure over 50 indicates expectations of an increase; under 50 indicates a decrease)

The outlook for crude steel production in January improved by 18.33 points from the month before to 50.0, indicating that market participants expected output to stay at a similar level to December. Expectations for steel inventories held by Chinese traders rose 10.98 points from the month before to 55.92 in January.

This is normally a weak time of year going into Chinese New Year and the coldest winter months," explained Bartholomew. "The concern is that steel inventory levels will start to climb over this period and put even more pressure on prices next month. Mills may take the opportunity to conduct maintenance work but the market needs deeper capacity reductions to help support prices."

The CSSI is based on a survey of approximately 60 to 75 China-based market participants including traders, stockists and steel mill operators.

Separate to the CSSI, the December monthly average price for Platts China export hot rolled coil prices was $259.8/mt free on board (FOB) China, down 0.5% from $261.1/mt in November.

The Platts China Steel Sentiment Index survey plays no role in Platts' formal price assessment processes. For more information, please visit: http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/steel.pdf

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