The Purchasing Managers' Index (PMI) for China's steel industry was 40.4 in August, down from 42.5 for July and marking the third on-month decline, the official index compiler CFLP Steel Logistics Professional Committee (CSLPC) said in its August 31 release.

CSLPC explained that during August, domestic steel demand weakened further, steel production decreased, mills' steel stocks mounted further, raw materials prices stayed at low levels, and prices of finished steel prices had hit bottom before bouncing back.

In August, the sub-index of new steel orders stood at 38.5, down from 40.3 in the prior month, as hot and humid weather in many parts of the country constrained steel demand for building projects, according to CSLPC.

As for Chinese steel production last month, the sub-index eased for the third consecutive month to 34.9, as against 38.5 during July, as mills' willingness to produce had been dampened by the low demand, CSLPC pointed out. Some mills had also suspended production for maintenance amid the transition phase for national rebar standards, it added.Daily crude steel output dropped during August 11-20, the committee said, quoting data from the China Iron and Steel Association, with crude steel output among the member steel mills slipping by 0.5% from early August to average 1.99 million tonnes/day.

During August, the sub-index of procurement prices for steelmaking raw materials reached 19.6, lower than the 20.8 in July, as demand for raw materials continued softening after mills had trimmed their production further, according to the committee.

As for September, "steel demand may pick up as the weather will become conducive to work on construction sites," CSLPC predicted. It added that due to favourable external and internal factors, "steel production may grow modestly on rising demand, and prices of steel and raw materials may see some gains as well."