CHINESE steel market participants expected new steel orders during September to stay at similar levels to August, although prices were predicted to soften slightly, according to the Platts China Steel Sentiment Index (CSSI), which showed a headline reading of 55.64 out of a possible 100 points in September.

The September index rose just 0.45 points from August’s 55.19, and was the second consecutive month the CSSI has stayed above the 50 threshold. A figure greater than 50 indicates expectations of an increase.

According to Platts, the outlook for new domestic steel orders increased by 1.35 points to 58.33, while export order expectations for the month deteriorated by 10.09 points to 24.48.

The CSSI rebounded strongly in August on the back of improved expectations for domestic demand. It showed a headline reading of 55.1 out of a possible 100. The index rose 28.6 points from July’s 26.5, giving a reading above the 50 threshold for the first time since May.

Crude steel production was expected to stay relatively flat in September, compared with August, while steel inventories held by traders were expected to rise further in response to weak demand.

Prices of flat steel products, such as hot rolled coil, were expected to weaken slightly in September, the CSSI showed. Sentiment is more positive regarding domestic demand, while expectations for export orders fell 10.09 points in September to 24.48.

“Generally, market sentiment remains extremely pessimistic with domestic steel prices at record lows, while demand from the manufacturing and property construction sectors has yet to improve,” said Platts’ managing editor of steel and steel raw materials Paul Bartholomew. “Exports have provided a vital outlet for Chinese steel but there is now so much competition for overseas markets that it is pulling export prices down and eroding confidence.”

CSSI reflects expectations of market participants for the month ahead. It is based on a survey of approximately 50 to 75 China-based market participants including traders, stockists and steel mill operators.

“Normally, you would expect a positive rebound for steel demand as the weather cools and construction activity picks up, particularly after the work stoppages around Beijing for the Victory Day parade and World Athletics Championship,” Paul Bartholomew said. “However, survey respondents did not envisage any significant improvement in the coming month.”

Separate to the CSSI, the average monthly price in August for China export hot rolled coil was $306.21 per tonne free on board (FOB) China, down 2.7% from $314.98 in July.

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