Steelease Purchasing Managers Index (Steel-PMI)

Definition:

Steel-PMI is an index reflecting changes of production, purchase and operation in an industry or an economy, which is compiled in accordance with internationally accepted methods and expressed as a percentage. The index can be used to indicate the future development trend of an industry or an economy. The reading equal to 50% indicates production, purchase and operation in an industry or an economy remain unchanged, the reading below 50% indicates the industry or economy is generally contracting, and the reading above 50% indicates the industry or economy is generally expanding. As a leading economic indicator, the US?? PMI has been leading the US GDP growth by more than six months.

China Steel PMI (report sample)

Employment down as chiese new year holiday arrives,downstream industries remain slugish

Summary

Based on a recent Steelease surwey of mayjor steel downstream industries, the steel-PMI was 40.49% in january 2012, down 3.96% MoM and down 7.79%YoY, a new record low. Seasonal factors and the arrival of the Chinese New Year holoday resulted in operating rates on construction and other manufacturing industries. A slowing econamic growth curbed the increases in new orders. In general, major steel downsteam industries kept contracting in january 2012. The indexes of both purchasing volume and raw material onventory dropped significantly on a yearly basis, a sign of pessimism towards the outlook, which resulted in limited stock replenishment for raw materials. At present, cash flow in domestic markets remains tight, and the reserve requirement ratio for banks stay high. Steelease believes that major steek downstream industries will not recover unless the govemment introduces favorable policies after the holiday.