China's monthly manufacturing steel demand
rebounded in June but was still lower than a year ago, S&P Global Commodity
Insights data showed. While construction-related manufacturing remained
depressed, most of the other sectors showed improvement due to resilient exports
and government support to infrastructure investment.
Several market participants
expected manufacturing steel demand outside of property-related sectors to
"fare well" for the rest of 2023. However, elevated steel production
would continue to dent steelmakers' steel profits.
China's manufacturing
production index for steel consumption, produced by S&P
Global, was at 116 points for June, up from 104 points in May, but still
lower than the year-ago 118 points.
The production index is based on
production data from China'sNational
Bureau of Statistics for 18 steel-related manufactured goods,
categorized into seven sectors and weighted according to their share of steel
consumption. The monthly production average in 2018 is used as the baseline of
100.
In June, manufacturing of
vehicles, ships, home appliances, power generation facilities and railway
facilities all posted month-on-month and year-on-year increases, but
machineries and containers fell on a yearly basis, the NBS data showed.
China's vehicle
production, accounting for around 21% of the manufacturing steel demand, has
been on an upward trend ever since March, due to strong exports.
China's vehicle
exports in June increased 65.7% on the year to 411,000 units, taking exports in
the first half of 2023 to 2.341 million units, up 77.1% on the year, according
to China's customs
data.
Owing to the strong exports,
especially for electric vehicle cars, China's vehicle
output in June still increased 0.8% on the year to 2.564 million units despite
sluggish domestic demand, the NBS data showed.
"China's passenger
car production and its steel demand are expected to continue upwards in the
second half of 2023, thanks to robust exports. But the improvement in home
appliances may not be sustainable due to dismal sales of new homes," a
mill source said.
Meanwhile, some market
participants said steel demand from shipbuilding will remain strong for the
remainder of this year due to the large backlog of shipbuilding orders received
in the past few years, while China's fiscal
support to infrastructure will continue to benefit power generation and
transport related manufacturing sectors.