Posted on 19 Oct 2023
China’s crude steel output fell 5% in September from August, official data showed on Wednesday, confounding some market expectations for a rise after steelmakers had lifted utilisation rates amid thepeak construction season.
The world’s largest steel producer manufactured 82.11 million metric tons of the ferrous metal last month, extending falls for the third consecutive monthfrom 86.41 million tons in August, and 90.8 million tons inJuly, datafrom the National Bureau of Statistics (NBS) showed.
Output last month, which was the lowest since the beginning of the year, was also down5.6% from a year ago.
“The data is surprisingly low, much lower than our previous estimate,” said Pei Hao, a Shanghai-based analyst at the international brokerage FIS, without providing details of his estimate.
Two other China-based analysts had predicted output of around 95 million tons. They declined to be identified because of the sensitivity around discussing official data.
“It’s really hard to find a solid reason to explain such a drastic drop, as output last month should be higher both year-on-year and month-on-month based on the data available,” Pei said.
The capacity utilisation rate of 247 blast-furnace-based steel mills surveyed by consultancy Mysteel averaged 92.76% in September, up from 91.16% in August and 88.19% in September 2022.
Iron ore stocks at ports are at a seven-year low, which also points to strong consumption by steel mills, analysts said.
However, some mills probably cut output last month to offset losses resulting from higher raw material prices and disappointing downstream demand, said Xu Xiangchun, content director at Mysteel.
Average daily steel output in September was 2.74 million tons, the lowest since December 2022, according to Reuters calculations based on NBS data.
It wasdown 1.8% from 2.79 million tons in August and down 5.6% from 2.9 million tons in September 2022.
China churned out 795.07 million tons of crude steel in the first three quarters of 2023, up 1.7% from a year before, easing from a year-on-year increase of 2.6% from January to August, NBS data showed.
Crude steel output will likely be lower in October as falling margins push more mills to lower production this month, said analysts.
Source:Reuters
