Macquarie’s Chinese steel sentiment survey crashes

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From Macquarie:

Most recent survey result gives the short signal The most recent reading of the steel survey released by Macq’s commodities team shows a sharp deterioration in both sentiment and orders – sentiment dropped to 38 from 80 just two months ago, and the order index, while higher than sentiment, is below 50 which is a short signal for the portfolio.

We recently downgraded Asian steel names JFE Holdings (5411 JP) from Neutral to Underperform, and Nippon Steel (5401 JP), POSCO (005490 KS) and Hyundai Steel (004020 KS) from Outperform to Neutral and the survey supports our more cautious view on the space. Steel survey has been very useful in calling the turning points specifically in Feb 2016, June 2016 (upgrades) and most recently in March 2017 (downgrade the Asian steel sector).

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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.