China's steel sector purchasing managers index (PMI) in May fell by 2.1 points from the previous month to 50 on fewer new orders although steel output increased this month.
Steel production sub-index increased by 1.5 points from a month earlier to 56, said the China steel logistics professionals committee (CSLPC) that compiles the steel PMI index.
The production impact of environment-related steel output restrictions have been limited while a spate of recent mergers and acquisitions have increased the production intensity among larger participants, all of which contributed to higher output, said the CSLPC.
The index of imported raw material, such as iron ore and coking coal, increased by 8.4 points at 51.6, while raw material stocks at mills fell from last month's levels.
The new orders index was down by 5 points at 46.7. A score below 50 indicates sectoral contraction. Orders for the steel sector did not grow uniformly in May with some regions and products showing higher demand while others faced sluggish demand.
China's official manufacturing PMI fell to 49.4 in May from 50.1 in April.
Raw material purchase price index rose by 8.2 points at 67.7. "The rapid growth of raw material cost pressure has brought a big impact on the production and operation of steel mills. The efficiency of steel mills this month is under pressure," said the CSLPC. Prices of iron ore, met coke, billet and scrap are higher on average in May than in April.
News Source: Argus Media