China’s manufacturing steel demand in October fell to its fourth lowest so far in 2022 due to a resurgence of COVID-19 cases and slowing demand from the property sector.
The Chinese manufacturing production index of steel consumption produced by S&P Global Commodity Insights stood at 108 points in October, down from 121 in September, although slightly higher than 107 points a year ago.
The production index is based on production data from China's National Bureau of Statistics for 18 steel-related manufactured goods, categorized into seven sectors and weighted according to their share of steel consumption. The monthly production average in 2018 is used as the baseline of 100.
If it was not for an improvement in passenger car production, the manufacturing steel demand in October would be the third lowest so far this year after April and July, and also lower than in the same month of 2021 and 2020.
As new COVID-19 cases continue to spread across large parts of China in November, the country’s manufacturing activity and its steel demand may fall further this month amid coronavirus-related social restrictions.
China has optimized its COVID-19 policy since early November, which has allowed many cities and districts to avoid full lockdowns. However, partial lockdowns and strengthened social restrictions in coronavirus-affected regions have adversely impacted logistics and economic activities.
Southwestern China’s Chongqing municipality has put most of its districts on lockdown since mid-November to contain COVID-19 cases. Construction sites have all been suspended. According to local steel traders targeting end users, local manufacturers of cars and auto parts have had to trim their production due to a shortage of parts caused by disrupted transportation.
China's passenger car sales and production in October already fell by 4.3% and 3.1% on the month respectively, data from the China Association of Automobile Manufacturers.
Moreover, some steel market participants said it would be difficult for the whole consumption sector and related manufacturing steel demand to recover in the foreseeable future amid coronavirus restrictions and stagnant household income.
