The CSSI is based on a survey of approximately 70 to 85 China-based market participants including traders and steel mills.

The June index dropped 31.06 points from 46.98 in May, the weakest reading since February 2015, The reading is the third consecutive monthly decline since March’s record of 89.42. (A reading above 50 indicates expectations of an increase/expansion and a reading below 50 indicates a decrease/contraction.)

The outlook for new domestic orders for steel over the coming month fell by 30.94 points from May to 16.26 in June, while expectations for new export orders fell by 32.43 points to 12.01, the weakest ever reading for this measure.

Price expectations for long steel products, such as rebar, fell by 17.50 points from May to 12.50 in June, the lowest reading since December 2015. The price outlook for flat steel products, such as hot rolled coil, fell 23.10 points to 18.33 in June.

The outlook for crude steel production in June plunged 23.81 points from the prior month to 33.33. Steel market participants expect steel inventories to drop slightly from May, with the June outlook edging down 2.92 points to 64.65.

“With steel prices in China on a decline since the start of May, many steel buyers are sitting on the sidelines waiting for clearer price directions before committing,” said Paul Bartholomew, senior managing editor of steel and raw materials for S&P Global Platts. “This is putting even more pressure on prices. Also, the outlook for new orders is even weaker now than it was late last year when steel prices reached a nadir.”

“It appears that one saving grace for steel producer prices may be that many steel companies are looking to trim production, having already ramped up in recent months. This could provide some support for prices in coming months, particularly if end-user demand deteriorates,” Mr Bartholomew added.