China’s steel PMI has risen for the third consecutive month to 49%, signaling a clear recovery in the steel market.

According to the index report released on the 1st by the Steel Logistics Professional Committee of the China Federation of Logistics and Purchasing, the domestic steel industry’s PMI stood at 49.0% in February, up 2.3 percentage points from the previous month, marking the third consecutive monthly increase and reaching its highest level since May 2014.

According to the analysis, both the new orders index—reflecting changes on the demand side—and the purchasing prices index—indicating shifts on the cost side—have improved markedly, signaling that positive factors are accumulating in the steel market. However, it is worth noting that in February, the production index rose to its highest level in nearly 18 months, while the new export orders index once again fell below 50%, entering contractionary territory. Meanwhile, the finished‑goods inventory index surged, suggesting that steel mills are eager to resume production but face export constraints, which could intensify supply pressures going forward.

The index indicates that steel mills are accelerating their resumption of production. In February, the steel industry’s production index rose for the third consecutive month to 49.5%, up 3.9 percentage points from the previous month. At the same time, purchasing activity linked to production showed a clear expansionary trend. The purchasing volume index rebounded by 5.5 percentage points to 50.4%, returning to the expansionary range above 50% for the first time in 15 months—the highest level since November 2014. Meanwhile, the raw materials import index stood at 52.6% in February, up 0.9 percentage points from the prior month; and the raw materials inventory index advanced for the third straight month to 51.1%, climbing back above the 50% threshold—the dividing line between expansion and contraction—for the first time in 11 months, reaching its highest level since February 2015.

Based on the current situation at steel mills, although the proportion of loss-making plants has narrowed recently, most companies remain in the red, and liquidity remains tight across the industry. Meanwhile, the raw-materials market continues to be robust; if steel producers ramp up output and push costs higher, any weakening in steel prices could once again derail the recovery in profitability, leaving resumed production merely a short-lived rebound.

Currently, cost support for the steel industry has strengthened significantly. In February, the steel industry’s purchasing price index continued its rebound, rising sharply by 11.1 percentage points from January to 49.9%, the highest level since January 2014. The index has now risen for three consecutive months, reaching a 26-month high, reflecting a pronounced recovery in raw material prices. Following the holiday period, import iron ore and steel billet prices posted the strongest gains. On February 20, import iron ore prices briefly hit $51.2 per tonne, marking a four-month peak.

Relevant index reports indicate that, driven by the “double‑low” effect of low production and low inventories, coupled with sustained policy support, the domestic steel market has entered a short‑term pattern of volatile but generally firm pricing. Looking ahead, demand will be the key determinant of the market’s ultimate trajectory, while supply‑side pressures are gradually coming to the fore.