The Purchasing Managers' Index (PMI) for the steel sector in China's leading steel-making province Hebei fell 4.6 month on month to 46.1 in December this year, as data from the province's Metallurgical Industry Association showed.

In December, the new order index stood at 39.0, down 11.0 month on month, due to weakened steel consumption especially from construction sector. Construction activities in northern China had been significantly impeded due to cold temperature and heavy snowfalls last month.

The new export order index was at 43.2, down 6.8 on the month. The intensified military action in the Red Sea pushed up coastal freight rates, adding to steel export costs and weighing on export demand.

The production index was at 50.0, felling 3.5 month on month. This was mainly attributed to the decline in steel mills' operating rates amid weakened demand and environmental inspections.

At the same time, the inventory index for finished steel in Hebei reached 50.0, up 2.4 from a month ago in December, while the ex-factory price index for finished steel dropped 3.5 to 75.6 month on month during the slack season.

The inventory index for raw materials increased 9.3 on the month to 47.7. Steel mills still purchased on a need-to basis against sluggish demand and production halts due to environmental inspections, contributing to reduced consumption for raw materials.

And the purchase index for raw materials climbed up 4.6 to 93.0, stimulated by rising prices of iron ore, scrap steel, coking coal and coke.

(Writing by yan.sun  Editing by Emma Yang)
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