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This index is very volatile but it’s a useful guide to turning points in the market and we may be seeing one. The Chinese steel PMI dropped from 51.4 in February to 50.6 in March. That’s not so bad but the internals are less encouraging with new orders falling from 55.3 to 50.6 and New Export Orders confirming that external demand is collapsing on higher prices down to 41.6:
The external collapse is a problem. February exports were down -39% year on year:
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In 2016, China exported 110mt of steel, 13.5% of its output. The first two months of 2017 annualised tracked at roughly 70mt and it appears to be getting worse not better.
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About the author
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.
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