Despite the weak official PMI today, there was one sub-component that disgorged napalm. The sub index for the steel sector jumped to 58.9 in February, from 49.3 in January and the internals are white hot:
Check out the growth in new orders and new export orders. Inventories are up but not excessive and the same goes for raw materials.
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The wild oscillations over the past two months suggest that the local strength is being exaggerated by the Chinese New Year effect. But it’s the new export orders that have me confounded. Perhaps there’s compression of these too owing to Chinese New Year.
Anyway, it’s a searing report and will offset any damage to iron ore that’s come in recent days from discussion of real estate curbs.