China’s manufacturing activity remained in contraction in August for a fifth consecutive month. However, several major steel-intensive manufacturing sectors continued to generate stable steel demand, supporting the domestic flat steel market, market participants said.

According to data from the National Bureau of Statistics, the manufacturing purchasing manager index (PMI) in August slightly increased to 49.4 points from 49.3 points in July but remained in contraction. A reading below 50 indicates contraction.

The PMI’s sub-index of new orders and new export orders contracted in August, but they were up from 49.4 points and 47.1 points in July at 49.5 and 47.2, respectively.

The sub-index of manufacturing production in August, however, expanded for the fourth straight month, improving from 50.5 points in July to 50.8.

The PMI for high-tech manufacturing and equipment manufacturing remained in expansion in August, but the PMI for the consumer goods sector was in contraction at 49.2 points, down from 49.5 points in July, according to data from NBS.

According to some steel trading and mill sources, steel demand from manufacturing sectors such as engineering machinery, cars, home appliances, ships, and new energy facilities remained strong in August. These sectors have contributed the most to the growth of steel demand across the entire manufacturing industry so far in 2025.

Sources expect the exports of home appliances could be affected in the remainder of 2025 due to US tariff hikes, but overall, manufacturing steel demand should remain stable.