BEIJING, Jan. 8, 2015 /PRNewswire/ -- The outlook for China's steel market in January has worsened, according to the latest Platts China Steel Sentiment Index (Platts CSSI), which shows a headline reading of 23.1 out of a possible 100 points in January. This comes as expectations of new orders are falling and steel output tipped to rise slightly over December levels.

The January index is down 14.3 points from 37.4 in December, the lowest reading in over a year and seventh-consecutive month the headline index has been below 50 points. 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.

"The worsening sentiment in the steel market is largely due to weak domestic demand from the construction sector, especially in Northern China where some projects have stopped due to the cold winter weather," said Sebastian Lewis, Platts Editorial Director, China. "In addition, export orders in January are expected to be weak as buyers had bought cargoes before January 1, when China removed its tax rebate on boron-added steel products."

Platts China Steel Sentiment Index - January 2015
(a figure over 50 indicates expectations of an increase; under 50 indicates a decrease)

                                Jan 15      Change       Dec 14
                                            m-o-m
                                            -----

    CSSI (Total New Orders) ?          23.1        -14.3        37.4
    ----------------------  ---        ----        -----        ----

    New Domestic Orders     ?          22.7        -14.4        37.0
    -------------------     ---        ----        -----        ----

    New Export Orders       ?          27.0        -14.9        41.9
    -----------------       ---        ----        -----        ----

    Steel Production        ?          53.3          1.8        51.6
    ----------------        ---        ----          ---        ----

    Stocks held at traders  ?          52.0        -17.3        69.3
    ----------------------  ---        ----        -----        ----

The weaker sentiment among end users means that traders expect their inventories to continue rising. The reading of 52.0 points for "stocks held at traders" category shows continuing expansion, although at a slower rate than in December.

Crude steel production is also expected to continue to grow with the January reading of 53.3 points, up 1.8 from December. This marks the second consecutive month of rising production, and is also in line with the seasonal pattern of increased steel output in advance of the Chinese New Year that falls in mid-February this year.

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.

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SOURCE Platts

SOURCE: Platts