China’s pace of steel production rebounded August after two months in a row of falling output.
Thanks to a recovery in domestic demand and expectations of increased sales during the months of September and October (and ahead of the late Autumn and Winter months when production curbs come into play to cut production) output jumped back above 87 million tonnes.
It was less than 2 million tonnes short of the all time high of 89.09 million tonnes reached in May.
Daily output in August was at 2.81 million tonnes compared with 2.75 million in July but still lower than the 2.92 million in June.
China’s crude steel output last month was 87.25 million tonnes, up by 2.4% from July and 9.3% from August 2018,
January-August output was up 9.1% from a year earlier at 664.87 million tonnes and heading for a record 1.1 billion tonnes by the end of December – despite prices being at multi-year highs since late January when the latest Brazilian mine dam wall disaster happened.
The solid production figures helps explain the near record level of imports of iron ore last month. Australia shipped more iron ore to China last month while Brazilian exports fell sharply.
Iron ore prices are a touch under $US100 a tonne for 62% Fe fines shipped to northern China – that was up 12% last week.
China’s iron ore imports rose 4.2% to 94.85 million tonnes in August from July’s 91.02 million tonnes.
But the first eight months of 2019, China’s imports of iron ore totaled 684.9 million tonnes, down from 710 million tonnes in the same period last year.
And some analysts reckon crude steel output will be higher in September for a couple of reasons – solid demand and the need to boost stocks of metal ahead of the slowdown from November through to March (the so-called Winter heating Seasons when production curbs come into play to cut pollution in northern cities) and the fact that the first week of October is a long holiday (Golden Week) overlain by the 70th anniversary of the foundation of modern China in 1949.
In fact, media reports say production curbs ill start in the last week of this month and continue into the first week of October to lower production in major cities – especially Beijing – for the 70th-anniversary celebrations.