Platts China Steel Sentiment Index improves in August

Singapore — The outlook for China's steel market has improved in August, with more participants tipping a rise in flat steel prices, according to the latest S&P Global Platts China Steel Sentiment Index, which shows a headline reading of 22.88 points out of 100.

The headline CSSI, which measures the outlook for new steel orders over the coming month, rose by 5.58 points from 17.30 in July. A reading above 50 indicates expectations of an increase/expansion and a reading below 50 indicates a decrease/contraction.

The headline CSSI has averaged just 24.04 over January-August, compared with 42.09 in the same period last year, when China's steel market was buoyant.

The outlook for new orders improved by 6.06 points from July to 24.85 in August. Expectations for flat-rolled steel prices jumped by 29.50 points to 56.80 in August, the first time since April the reading has been above 50 points.

CSSI respondents expected crude steel output to ease slightly over the next month, with August's reading down 4.87 points from the month before at 34.78. There was an increase in the number of participants expecting steel inventories to fall, as the August measure dropped by 24.36 points from the previous month to 21.23.

The CSSI is based on a survey of approximately 50 China-based traders and steel mills.

The outlook for flat steel prices recently improved on some signs of a temporary thawing of relations between China and the US. China's government also indicated it would do more to support the manufacturing sector, the biggest market for flat steel.

But the domestic hot-rolled coil price fell to Yuan 3,740/mt ($531/mt) on August 16 after averaging Yuan 3,883/mt in July. HRC steel margins have been in negative territory since the end of July, falling to as low as minus $40.62/mt on August 9, according to Platts data.

-- Analysis by Sylvia Cao, Crystal Hao and Zhang Jing, newsdesk@spglobal.com

-- Edited by Wendy Wells, wendy.wells@spglobal.com