October 6, 2015 - 11:48 AM EDT
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Platts China Steel Sentiment Index Slumps in October

Bleak Outlook for New Orders and Prices and Inventories Expected to Rise

BEIJING, Oct. 6, 2015 /PRNewswire/ -- Chinese steel market participants' expectations for new steel orders and prices over the next month have plunged and rising steel inventories could further dampen price recovery hopes, according to the latest Platts China Steel Sentiment Index (Platts CSSI). The Platts CSSI showed a headline reading of 35.46 out of a possible 100 points in October.

The October index fell 20.17 points from September's 55.64 and signaled a retreat to below the 50 threshold after two stronger months. A figure over 50 indicates expectations of an increase in health for the industry; under 50 indicates a decrease.  The outlook for new domestic steel orders slumped by 20.89 points to 36.07, while export order expectations deteriorated 6.30 points to 28.27.

Price expectations for flat steel products, such as hot rolled coil, are pessimistic, plunging 34.29 points from last month to 10.71 in October, the CSSI showed. Crude steel production is tipped to increase slightly in the coming month. Combined with a lack of domestic and export demand for steel, this could explain why inventory levels are forecast to climb.

"The October CSSI was conducted before China's National holidays which could partly explain why steel market participants expected demand and prices to soften further," said Paul Bartholomew, Platts managing editor, steel & steel raw materials. "But worryingly, they don't expect much of an improvement when the market restarts, because underlying demand in China is weak in response to a slowing economy."

Platts China Steel Sentiment Index – October 2015
(a figure over 50 indicates expectations of an increase; under 50 indicates a decrease)


October 2015

Change from September

(points)

CSSI (Total New Orders)

35.46

-20.17

New Domestic Orders

36.09

-20.89

New Export Orders

28.27

-6.30

Steel Production

41.94

6.94

Steel Prices (Flat Products)

10.71

-34.29

Inventory Held by Traders

71.20

23.50

 

CSSI reflects expectations of market participants for the month ahead. A CSSI reading above 50 indicates an increase/expansion and a reading below 50 indicates a decrease/contraction. The index is based on a survey of approximately 50 to 75 China-based market participants including traders, stockists and steel mill operators.

"The lack of confidence in domestic demand for steel explains why Chinese mills and traders are increasingly looking overseas for customers, and why China could potentially export around 110 million mt of steel this year," Bartholomew said.

Separate to the CSSI, the September monthly average price for Platts China export hot rolled coil prices was $280.92 per metric ton FOB China. This was down 8% from the $306.21/mt in August.

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

CONTACT
Global, Americas, Asia: Kathleen Tanzy, + 1 917 331 4607, kathleen.tanzy@platts.com

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/platts-china-steel-sentiment-index-slumps-in-october-300155024.html

SOURCE Platts


Source: PR Newswire (October 6, 2015 - 11:48 AM EDT)

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