NBS: China's Jun daily steel output refreshes record high

The latest data from China's National Bureau of Statistics (NBS) suggests the country could conceivably produce close to 1 billion tonnes of crude steel for the whole 2019 if the steel production kept running at nearly 10% year-on-year growth rate, though market sources dismissed the possibility.

In June, China’s crude steel output maintained a fast growth, jumping by 10% on year to 87.53 million tonnes, and the daily output refreshed the record high, hitting 2.92 million tonnes/day, according to NBS’s data published on July 15.

The June result took the country's crude steel output over January-June to 492.2 million tonnes, or up 9.9% on year, with the growth rate being marginally lower than that for the first five months by just 0.1 percentage point.

Theoretically speaking, China's crude steel output would come to very close to 1 billion tonnes if the Chinese mills replicate what they had been doing in the first half for July-December, Mysteel Global notes, though many market analysts dismissed the possibility, reasoning that China's domestic steel demand is expected to slow down in the latter half of 2019.

Addressing an industry event in Shanghai earlier this month, Ren Zhuqian, Mysteel’s senior analyst, predicted that the country’s total steel output would grow 3.6% on year or by 34 million tonnes in 2019 from 2018, which will be calculated to 962 million tonnes based on China's 928 million tonnes of crude steel output for 2018.

Market sources agreed that steel consumption in the sectors of property, machinery, and auto manufacturing may all subside in growths or decline further for the rest of 2019, Mysteel Global understood from recent industrial events in China.

The high average daily production of crude steel in June indicated Chinese steel mills’ remaining high enthusiasm for production, although steelmakers in Tangshan, North China’s Hebei province, were required to cut their blast furnace capacity utilization rates by as much as 50% starting from the last week of June until the end of July under the city government’s enforced pollution control, steel mills in other Chinese regions had probably maintained high output as their margins improved modestly with the recovery in domestic steel prices.

For June, the average blast furnace utilization among the 247 blast-furnace steelmakers across China under Mysteel’s weekly survey, thus, still increased by 0.69 percentage point on month to 84.61%, though it eased for the third week over June 21-27 to 83.8% amid Tangshan’s production curb, according to Mysteel’s database.

Last month, China’s finished steel output surged by 12.6% on year to 107.1 million tonnes, taking the total production for January-June to 586.9 million tonnes, jumping by 11.4% from the first half of last year, according to the NBS statistics.

The robust output in finished steel was mainly attributed to the improved profit margins of steel mills, as China’s national average price of HRB400 20mm dia rebar recovered significantly by Yuan 120/tonne ($17.5/t) from the recent low of Yuan 3,969/t on June 18 to Yuan 4,089/t as of June 28, Mysteel’s data shows.

China’s domestic pig iron output reached 70.1 million tonnes for June, higher by 5.8% year on year though the growth eased further by another 0.8 percentage point from that for May, and over January-June, hot metal output increased by 7.9% on year to 404.2 million tonnes, NBS’s data shows.

Written by Nancy Zheng,

Edited by Russ McCulloch,