In August, the steel PMI showed a drop in both supply and demand, adding to downward pressure on the industry

According to the steel industry PMI released by the china-iot Steel Logistics Professional Committee, the index was 41.8% in August, down 1.3 percentage points from the previous month, adding to downward pressure on the steel industry. Steel demand is expected to enter a seasonal peak in September, but production will continue to be tight. Steel prices are expected to rise modestly, while raw material costs will rise. The focus of the steel market in August was on the production end, with a drop in purchasing activity as a result of controls in many locations. The production index stood at 44.0 per cent in August, the second consecutive month of low levels below 45 per cent, indicating a continued decline in production. Steel mills'raw material purchasing activity slowed, with the purchasing volume index falling 1.3 percentage points month-on-month to 39.7 percent. Production decline driven down iron ore prices, steel enterprise cost pressure eased. Steel production cuts cut iron ore consumption in August and prices have fallen since July, falling below $140 a tonne at the end of August. Coke rose three times in August because of tight supplies of coal. But overall, cost pressure eased in August, the purchase price index for 47.7% , the first time in nearly 10 months fell below 50% . Off-season and epidemic factors appear, steel market demand continued to decline. The new orders index stood at 31.6 per cent in August, four consecutive months below 40 per cent. The demand of steel for capital construction is not optimistic. At present, the issuing speed of local government special debt is slow. The epidemic situation also affects the flow of people and materials and the construction rhythm. Tighter property policy has weakened its short-term support for commodity markets. Exports continued to tighten after the elimination of export rebates on 23 steel products on August 1, with the index of new export orders falling below 35 per cent for the second month in a row to 31.8 per cent. The decline in market demand led to a correction in steel prices, industry profits may have declined. While steel production fell in August, the fall in demand was more pronounced and support for sales prices weakened significantly, with sector profits falling month-on-month in August. September is expected, if the epidemic does not rebound, the steel market or will enter a period of peak season. First, the high temperature and rainy weather ended, at the same time, the impact of the epidemic weakened and the demand for steel for infrastructure construction sites was released; Second, the shipping market warmed up and the demand for steel for containers and ships increased; third, the automobile and household appliance industries will also enter the peak season; Fourth, the continuous loose monetary environment is conducive to stable economic operation. The expected index of production and operating activities was 53.8 percent in August, indicating that enterprises had expectations for the future. The policy of restricting production continued to exert force and the production end continued to be under pressure. At present, the policy of limiting production in various places has achieved certain results, but in the light of policy objectives, the policy still has room for further development. Under the guidance of the policy, in September and the fourth quarter, steel production will still run tight. However, as the market demand tends to pick up, the importance of "guaranteed supply" will appear, so in the "limited production" and "guaranteed supply" under the game, in September steel production is expected to be relatively limited. Steel prices are expected to rise, enterprise costs or will rise. In September, production constraints, rising demand is expected to support steel prices up, but based on continued commodity prices bid-up behavior under strict control, steel prices are difficult to rise, is expected to moderate upward. At present, the world's major economies are gradually recovering production capacity, demand for commodities, while the current shortage of coke supply problems remain, its prices or continue to run high. Overall, in September steel raw materials and finished products prices or synchronous rise.