Business activity in Chinese steel mills fell to its lowest level in five months in June, according to a private poll released on Monday, which indicates the continued negative impact on the economy of tensions in Sino-US relations.
China's Steel Purchasing Managers' Index (PMI) fell 1.8 points in June from May to 48.2 on the back of lower demand for steel.
The sub-index of steel production in June fell 6.9 points from a month earlier to 49.1, according to the China Steel Logistics Specialists Committee (CSLPC), which compiles the sectoral PMI.
The drop was due to restrictions on blast furnaces in Tangshan and Wan, two major steel cities in Hebei province, from June 24 to July 31.
Environmental restrictions in Tangshan and Wan also cut 3.4 points to 47.8 from May, the index of imported raw materials in June. Inventories of raw materials at the factories decreased by 1.6 points from the level of 43.5 in May, as replenishment of iron ore raw materials slowed due to higher prices.
The new orders index rose 1.2 points to 47.9. A score below 50 points indicates a contraction in the sector. Heavy rains in southern China, combined with hot weather in the north, reduced demand for steel.
The official manufacturing PMI is unchanged since May, remaining at 49.4.
The index of purchasing prices for raw materials decreased by 4.2 points to 63.5.
"The cost of raw materials is still high and the price of iron ore climbed to a new five-year high," CSLPC said.
