The Chinese steel industry is gradually transitioning from a phased approach; Extremely cold valley; Step out of the middle. According to the latest index report released by the Steel Logistics Professional Committee of the China Federation of Logistics and Purchasing, the PMI index of the Chinese steel industry rebounded by 6.5 percentage points month on month in March, approaching 50%, indicating that the sluggish situation in the steel market is gradually easing. However, various factors that constrain the rebound of steel prices still exist.

According to relevant reports, the PMI index of the steel industry reached 49.3% in March. Especially the new order index and new export order index have both returned to above 50%, showing a strong upward trend, indicating that demand is expected to continue to recover in the future.

The production of the steel industry is becoming increasingly active. The production index of the steel industry in March was 46.5%, up 7.1 percentage points from the previous month. At the same time, procurement activities related to production have also rebounded, with the steel industry's procurement volume index slightly increasing to 46%, up 1.7 percentage points from February. The raw material inventory index continued to decline, at 43.3%, a decrease of 2.4 percentage points from February. From the trend changes of the three indices, it can be seen that the production activities of steel enterprises are becoming more active, raw material procurement is increasing, and inventory is showing a decline. According to the estimation of China Iron and Steel Association, the daily crude steel production in China has basically recovered to the level of early October last year in mid March.

A representative from the China Federation of Iron and Steel Industry Professional Committee said that with the improvement of weather and the increase in construction project commencement rate, the release of terminal demand in the steel industry significantly accelerated in March. According to relevant monitoring data, the terminal procurement volume of Shanghai's construction steel market in February of the lunar calendar has significantly increased by 89% compared to January of the lunar calendar, and has grown by 6% compared to the same period last year. However, one thing that must be paid attention to is that the current pace of demand release is relatively repetitive, and it is difficult for prices to continue to rise. In the first two months of this year, the growth rate of investment in real estate development dropped year on year, and the completion of fixed assets investment in railway and transportation also declined year on year. The demand of major downstream industries of steel is still difficult to be optimistic.

The cost changes of raw materials such as iron ore in the steel front-end have always been a focus of market attention. According to this index report, in March, the steel industry's purchase price index rebounded and returned to the expansion range, reaching 50.3%, despite continuous declines in the first two months. Data shows that since March, domestic mineral prices have remained generally stable, but the market demand for North China iron concentrate powder is relatively sluggish, and mineral prices lack inherent upward momentum; The price of imported minerals has slightly increased, rising by about $3 per ton since March. With the gradual depletion of inventory in the early stage, steel mills are expected to increase their procurement efforts again in the later stage, and the cost support role of steel prices may rise.

Relevant personnel remind that although the demand in the steel industry is recovering and inventory is decreasing, the market environment is still relatively complex, with many macro level uncertainties. It is expected that the price increase of domestic steel market in April will be limited.