The HSBC China manufacturing purchasing managers’ index (PMI) rebounded two full points to 50.7 in February, signaling the first improvement in conditions since October. Key to the improvement were signs of better domestic demand for manufactured goods, which will no doubt reassure steelmakers, Kallanish notes.

Chinese manufacturing production and overall new orders increased, despite a slight decline in new export orders, HSBC says. Steelmakers have noted a slight increase in buying activity by manufacturers for the first time since last October.

On the downside, “marked reductions in both input and output prices indicated that deflationary pressures persist,” notes Annabel Fiddes, economist at Markit, which jointly releases the PMI with HSBC. Falling oil prices were the main driver of the decline in manufacturing input prices, but the deflationary trend is not a good sign for steel either, Kallanish notes.

The final figure for February was also revised upwards by a not insignificant 0.6 points, compared to the flash reading released just a week earlier. This may have been partly due to an adjustment for the Chinese New Year, which fell in February this year, but started in January in 2013.