Mac Bank’s proprietary survey of Chinese steel mills for February is out and shows a little lift for prospects:
The February results of our proprietary China steel survey (in which we interview 40 steel mills, 30 steel traders and 30 iron ore traders) has started to show some signs of improvement in sentiment at the mills and traders. Data on February conditions remains poor, impacted by the Chinese New Year holiday in the first week of the month, but forward expectations are improving as we move out of the weakest season for demand. Two particular factors will be crucial over the next month. Firstly, any indication as to whether construction sector demand is picking up to match expectations. Secondly, movements in finished goods inventory levels at steel mills, which currently look high and are tying up a lot of working capital, making steel mill purchasing increasingly difficult.
Hmm, well, that doesn’t look great to me. compare the current bounce in sentiment versus the seasonal bounces in previous years.
As well, both iron ore and steel stocks are reaching for the skies:
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Not sure how this dovetails with the idea put about by Mac that mills have aggressively destocked already.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
