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China sets new record high for crude steel output in January

CHINA produced a record 52.53 million tonnes of crude steel in January, confirming market sentiment that the government’s efforts to curtail overproduction have gone nowhere.

“That policy has never been very successful,” Chen Yue, a steel analyst with Shanghai Cifco Futures, said.

“The government wants to cut overcapacity by pushing for consolidation, but even that hasn’t produced much results.”

Now, Chen said, mills are preparing for seasonally higher consumption period in the warmer months ahead.

The record output number was almost buried in the way China released its output data for January and February.

The National Statistics Bureau releases output data for the first two months of the year in March, instead of monthly as usual, to de-emphasise distortions caused by the week-long Lunar New Year break.

As a result, the bureau’s headline numbers Thursday for crude steel output were the relatively high 50.36 million tonnes for February, and 102.89 million tonnes for the first two months of the year.

Those figures indicate that China produced 52.53 million tonnes of crude steel in January, breaking the record 52.3 million tonnes set in August last year.

The new record underlined again the failures of Beijing’s repeated and highly public campaign to contain overcapacity in the steelmaking industry.

Deng Qilin, chairman of the China Iron and Steel Association, acknowledged as much in an interview Sunday.

“Smaller steel mills are still producing a lot,” he said. “The effort to eliminate outdated output capacity hasn’t reached the level of government requirements.”

Utilisation rates at Chinese steel mills currently stand around 90 per cent, said Yu Liangui, a senior analyst with China’s Mysteel research house.

Preliminary customs data Wednesday showed that China imported 49.4 million tonnes of iron ore in February, up 5.6 per cent from a year earlier and 5.9 per cent from the previous month, which Yu suggested was a “normal” level of imports to sustain the ramping up of steel production in the months ahead…read more at The Australian