China’s steel market unmoved by lower-than-expected HSBC flash PMI

HSBC’s flash purchasing managers’ index for Chinese manufacturing sector dipped again in December, pointing to a second straight month of slowdown in the sector.

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The index stood at 50.5 points for the month, compared with a final reading of 50.8 points in November, according to the bank’s data released on Monday December 16.

The figure is also lower than the market consensus of 50.9 points.

“The December HSBC flash manufacturing PMI reading for China slowed marginally from November’s final reading. But it still stands above the average reading for the third quarter, implying that the recovering trend of the manufacturing sector starting from July still holds up,” Qu Hongbin, HSBC’s China chief economist, commented.

The country’s steel market was generally unmoved by the lower-than-expected PMI figure.

The figure alone cannot easily affect market sentiment as it saw little change, a Shanghai-based trading source said.

“Compared with the economic data, I’m more concerned about the supply and demand, which are key fundamentals for the spot market,” a source at a northern Chinese mill said.

“As the oversupply situation is unlikely to improve in the short term, I think prices lack the momentum to see any sustainable recovery,” he predicted.

Eastern China’s hot rolled coil prices rose slightly by 10-20 yuan ($2-3) per tonne last week, which were mainly driven by higher list prices from major mills.