Chinese growth is falling away

The PMIs are beginning to follow the credit tightening:

Local new orders are OK but exports are eroding steadily:

Steel PMI new orders were down hard at 34.8.

Support is still coming from the global reopening:

The global steel-using industry registered the quickest improvement in overall operating conditions since December 2010 in May, according to the latest PMI™ data, amid sustained expansions in output and new orders. Growth rates of both segments quickened in comparison to April, and were strong overall. Businesses commonly associated expansions with the continued recovery in demand as COVID-19 restrictions eased. Higher production requirements and pressure on capacity encouraged firms to increase employment levels at the quickest pace in over three years. At the same time, sustained increases in raw material prices contributed to the steepest rise in output prices on record.

At 55.9 in May, the seasonally adjusted Global Steel Users Purchasing Managers Index™ (PMI™) – a composite indicator designed to give an accurate overview of operating conditions at manufacturers identified as heavy users of steel – rose from 55.5 in April, signalling a strong improvement in the overall health of the sector. Notably, steel users in the US and Europe saw the sharpest upturns in operating conditions on record (since May 2007), while growth at Asia-based firms was unchanged and solid.

Weakening Chinese exports does not tally with strengthening global demand for steel but that may be explained by the recent Chinese export ban.

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