BEIJING, March 31 Activity in China's steel
industry expanded at a slower pace in March even as mills
continued to ramp up output, sparking worries of oversupply in
the world's top producer of the metal, an industry survey showed
A renaissance in China's steel industry has been a major
driver of the world's second-largest economy in recent quarters,
helping generate the strongest profit growth in years.
The Purchasing Managers' Index (PMI) for the steel sector
fell to 50.6 in March, down from February's 51.4 but still above
the 50-point mark that separates growth from contraction on a
monthly basis, according to data from China Federation of
Logistics & Purchasing (CFLP).
Since last year, cash-starved Chinese mills have boosted
production to take advantage of rising metal prices and higher
profit margins, but a reading on new orders slipped to 50.6 in
March from 55.3 in the previous month, suggesting a sharp
cooling in demand.
Steel prices were on track for a 4 percent fall in
March, the first monthly drop since December, on worries that
supply is outstripping demand.
Inventories of finished goods expanded for the first time in
March after five months of decline, rising to 53 from 47.7 in
February, its highest level since July 2015.
But despite rising inventories, steel output quickened to a
10-month high in the month, up to 52 from 50.4 in February.
"If inventories can't be digested quickly, steel factories
will once again face relatively large destocking pressures,"
CFLP said in a release, adding that steel inventory by March 31
was 29.6 percent higher than the same time last year.
A months-long construction boom fuelled by a strong housing
market and higher government infrastructure spending have
spurred China's demand for steel and other building materials.
But fresh government curbs to cool the heated property
market in recent weeks are expected to dampen housing demand and
drag on investment and industrial activity eventually.
More than a dozen Chinese cities have tightened restrictions
on home purchases so far this month to deter
(Reporting by Yawen Chen and Josephine Mason; Editing by Kim