Some more today on the recent rocket ship of Chinese steel new orders, from Macquarie:
Data from the China Federation of Logistics & Purchasing (CFLP)1 show that activity in China’s steel sector expanded at its fastest pace in August since April 2016, with the steel PMI index rising to 57.2 from 54.9 in July. The steel PMI is a composite index based on the diffusion indices for five major components, with the following weightings: new orders (30%), output (25%), employment (20%), supplier delivery times (15%) and inventories (10%).
A breakdown of the steel PMI data shows that domestic demand is booming, with new domestic orders index rising to 66.6 in August – the highest level since February 2011. The reading suggests that steel demand has taken another leap higher in August, after rising by 10.2% YoY in July. Year to date, Chinese apparent consumption of steel has increased by 6.8%, while crude steel production by only 1.5% as steel export volumes have continued to decline.
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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.
