BEIJING, Nov. 10, 2014 /PRNewswire/ -- Chinese steel market participants expect steel demand to weaken further this year, with the outlook for new export orders dropping dramatically, according to the latest Platts China Steel Sentiment Index (Platts CSSI), which showed a headline reading of 25.61 out of a possible 100 points in November.

The index has fallen to its lowest level since the CSSI began in May 2013, dropping 12.47 points from 38.09 in October. The CSSI reflects expectations of market participants for the month ahead. Similar to a purchasing managers' index, a CSSI reading above 50 indicates an increase/expansion and a reading below 50 indicates a decrease/contraction.

    Platts China Steel Sentiment Index - November 2014

    (a figure over 50 indicates expectations of an increase; under 50 indicates a decrease)
    --------------------------------------------------------------------------------------

                                    Nov 14               Change                     Oct 14        YTD
                                                          m-o-m                                    average
                                                                                                       --- -------

    CSSI (Total
     New Orders)                                 25.61                      -12.47          38.09                  48.75
    ------------                                 -----                      ------          -----                  -----

    New Domestic
     Orders                                      25.01                      -10.23          35.25                  48.58
    ------------                                 -----                      ------          -----                  -----

    New Export
     Orders                                      32.62                      -38.33          70.96                  50.73
    ----------                                   -----                      ------          -----                  -----

    Steel
     Production                                  34.48                       -0.51          35.00                  42.95
    -----------                                  -----                       -----          -----                  -----

    Inventories
     at mills                                    43.10                      -18.56          61.67                  52.90
    -----------                                  -----                      ------          -----                  -----

    Steel Prices                                 27.77                        1.04          26.74                  40.10
    ------------                                 -----                        ----          -----                  -----

The most striking reading in the latest index is the collapse of expectations for new export orders, which dropped 38.33 points from October's 70.96 to 32.62 in November. This is despite the record steel exports from China seen this year, which have helped offset weak domestic demand and kept steel production at relatively high levels.

"Speculation that China is considering removing tax rebates on exports of certain construction steel products has massively dampened sentiment - particularly as the domestic property construction market remains extremely weak," said Paul Bartholomew, Platts managing editor for steel and raw materials.

China's steel market participants are expecting crude steel production to stay at similar levels to last month. The reading of 34.48 for steel production in November was down 0.51 points month over month, and is the weakest reading since November 2013.

The only sub-index that rose - albeit very slightly - in the latest CSSI was expectations of steel prices, which were already very weak. All of the sub-indices in November were well below year-to-date average readings.

"The outlook for steel in China is normally weak at this time of year coming into their winter but is more pronounced this year with concerns around the export market. It could mean that smaller steel mills will adopt even more of a hand-to-mouth approach to buying raw materials and may undermine any seasonal restocking of iron ore," Bartholomew said.

The monthly Platts CSSI is based on a survey of approximately 50 to 75 China-based market participants including traders, stockists and steel mill operators. The survey of month-ahead sentiment is conducted during the last full working week of each month, with the results published via press release and Platts' products and services before the 10th of the next month. Platts began tracking steel sector sentiment in China in May 2013. The Platts China Steel Sentiment Index survey plays no role in Platts' formal price assessment processes.

For more information about steel and metals visit the website at www.platts.com.

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts' coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets. A division of McGraw Hill Financial (NYSE: MHFI), Platts is based in London with more than 1000 employees in more than 15 offices worldwide. Additional information is available at www.platts.com.

About McGraw Hill Financial: McGraw Hill Financial, a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and McGraw Hill Construction. The Company has approximately 18,000 employees in 30 countries. Additional information is available at www.mhfi.com.

SOURCE Platts

SOURCE: Platts