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This is the lowest the index has been since February.

The latest reading, published by the China Federation of Logistics & Purchasing (CFLP) on Wednesday October 1, indicates that contraction in the sector has grown as it fell further below the 50-point threshold.

“The PMI reading shows that overall weakness continues in the steel market, where supply-demand discrepancy was highlighted and the support from costs of production was weakened,” the CFLP said.

But it added that there were positive factors as China’s central bank has announced that it would ease housing loan policies, infrastructures are being built and more steel production capacity are being cut.

“Steel prices have been pretty low now after the recent drops and many mills are in the red. There is limited room expected for steel prices to continue to go down, while rangebound correction should dominate the market in October,” CFLP said.

Meanwhile, China’s official manufacturing PMI stood at 51.1 points for September, unchanged from that for August, according to the National Bureau of Statistics (NBS).

“According to recent PMIs and other major economic indicators, our economic growth has stepped into a new norm, where small companies in the manufacturing industry still face more difficulties,” the bureau’s senior statistician Zhao Qinghe said in its statement.

Earlier this week, HSBC published a final PMI of 50.2 points for China’s manufacturing sector in September, unchanged from the final reading for August, but down from the bank’s flash reading of 50.5 points last week.