Hebei Province Steel Sector Struggles Amid Global Market Challenges: PMI Update for February 2025
In February 2025, the steel sector of Hebei Province, a key industrial region in China, experienced a dip in its Purchasing Managers' Index, which decreased by 2.3 percentage points, dropping to 45.9%. This marks a continued period of contraction in the local steel industry, as the PMI for the steel sector remained below 50%, indicating a reduction in overall sector activity.
In contrast, China’s national steel PMI showed a month-on-month improvement of 1.8 percentage points, rising to 45.1%, suggesting that the broader steel sector in the country was experiencing a mild recovery. However, Hebei’s performance was relatively weaker, highlighting some regional disparities within the industry’s growth trajectory.
New Order Index and Export Challenges
One of the bright spots in February was the new order index, which increased to 48.7% for Hebei Province’s steel sector. This figure showed an improvement of 4.8 percentage points from January, driven largely by downstream users resuming operations after the Chinese New Year holiday. This seasonal post-holiday surge in demand helped boost new orders, reflecting some optimism within the local market.
However, despite this uptick in new orders, production levels in Hebei’s steel sector continued to decline. The production index decreased by 8.6 percentage points, falling to just 39.0%, signaling a slowdown in manufacturing activity in February. This decline is especially notable given the seasonal demand recovery post-holiday.
The new export order index also saw a decline, dropping by 2.4 percentage points, to 52.6%, as global protectionism and rising trade tariffs began to weigh on the sector. Tariffs from major steel-importing countries such as the United States, South Korea, and Vietnam have been announced on Chinese imports, negatively impacting China’s steel export volumes. These tariffs are likely to affect the competitiveness of Chinese steel products in global markets, further dampening export prospects for Hebei’s steel producers.
Inventory and Price Trends
Another area of concern was the inventory levels of steel products in Hebei. The finished steel inventory index fell by 8.1 percentage points, to 43.2%, showing a decline in stockpiles, which typically indicates a reduction in production output or slower sales. This drop could be attributed to a variety of factors, including low demand in both the domestic and export markets, as well as efforts to reduce overstocking during a period of weakened demand.
Similarly, the raw material inventory index also decreased by a significant 17.0 percentage points, standing at 39.0%. This dramatic drop suggests that steel producers in the region may have been facing challenges with sourcing materials or are anticipating a slowdown in production, which could affect their ability to maintain sufficient inventory levels.
On the price front, the ex-works price index for finished steel in Hebei dropped sharply by 19.0 percentage points, settling at 51.2%. This decline suggests that steel prices in the region are coming under pressure, likely due to lower demand and increased global competition. Furthermore, the purchasing price index for raw materials also fell by 3.9 percentage points, reaching 34.2%, signaling weaker cost pressures for steelmakers, though this could also be indicative of reduced demand for raw materials in the region.
Market Outlook
Overall, Hebei’s steel sector faced a challenging February, with declining production, weaker export demand, and a deteriorating pricing environment. The ongoing global trade tensions and rising tariffs from key importers like the United States and South Korea are expected to further hamper the sector’s recovery prospects. However, the increase in new orders and the relatively strong national PMI point to a potential cautious rebound in the broader steel market if conditions improve.
Despite these challenges, the steel sector in Hebei remains a critical component of China’s overall industrial economy, and the coming months will be pivotal in determining whether the sector can regain stability amidst external pressures and a global shift toward protectionist trade measures.
Key Takeaways:
• February PMI for Hebei’s steel sector decreased to 45.9%, down 2.3 percentage points month on month, signaling continued contraction in the region’s steel production.
• The national PMI for China saw a modest increase, rising by 1.8 percentage points to 45.1%, indicating some recovery in the broader steel sector.
• The new order index in Hebei improved to 48.7%, up 4.8 percentage points, driven by post-holiday demand resumption.
• Production levels in Hebei continued to decline, with the production index falling to 39.0%, a drop of 8.6 percentage points.
• New export orders in Hebei decreased by 2.4 percentage points, reaching 52.6%, amid rising tariffs and protectionist measures from major steel-importing countries.
• Finished steel inventory declined by 8.1 percentage points, standing at 43.2%, signaling weaker demand and sales.
• Raw material inventories also saw a 17.0 percentage point drop, indicating potential challenges in maintaining material supply for production.
• The ex-works price index for finished steel fell by 19.0 percentage points, to 51.2%, reflecting downward pressure on steel prices.
• Purchasing price index for raw materials decreased by 3.9 percentage points, settling at 34.2%, indicating lower costs for steelmakers.
