Chinese steel market participants expect new steel orders during September to stay at similar levels to last month, though prices could soften slightly, according to the latest Platts China Steel Sentiment Index (Platts 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. 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.

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 currently 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 Paul Bartholomew, Platts managing editor of steel and steel raw materials. “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.”

Platts, Beijing