The last batch of economic data from China for August was better than expected (see separate story) but a standout was the continuing boom in crude steel output – something few analysts were expecting at the start of the year and certainly none forecast when the COVID-19 pandemic hit in February and March.
Six months on and it now looks very likely that China’s crude steel output will top the billion tonnes mark for the first time ever this year.
Data on Tuesday from the National Bureau of Statistics revealed – surprisingly – that crude steel production hit a third all-time high this year in August – 94.85 million tonnes.
That was up 1.6% from June’s former high and up 8.4% from the August 2019 figure of 87.3 million tonnes.
That in turn saw production for the eight months to August rise 3.7% to just over 689 million tonnes. That puts it on track to top the 2019 record figure of 996.34 million tonnes.
Four months of production around the 90 million tonnes mark (a bit conservative compared to July and June levels) will see output easily break the old record and top the billion tonne level for the first time.
Driving output higher was strong housing and infrastructure construction activity, according to the monthly report on China’s economic data.
(Along with steel cement production, another key indicator of infrastructure spending, rose 6.6% from August 2019. Electronics was also up – 8.7% and car output rose 7.6% despite two solid rises in June and July. Output of electricity rose by 6.8% from a year ago.
But while demand for steel drove output higher, it didn’t drive demand for imported ore. Analysts reckon Chinese mills ran down stocks in August, at a time when prices remained well above $US100 a tonne.
Prices have since risen to around $US130 a tonne.
China’s trade data last week revealed iron ore imports fell 10.9% from a month earlier, easing from the record high in July on fewer shipments from big miners and port congestion.
China’s customs administration data for August showed 100.36 million tonnes of iron ore were imported last month. That was down from 112.65 million tonnes in July but up 5.8% from the same period a year earlier.
In the first eight months of 2020, China imported 759.91 million tonnes of iron ore, rising 11% from the January-August period in 2019,
Monday’s price rises in the shares of BHP, Rio Tinto and Fortescue came a day earlier it seems. A different story with the prices of two of the three big miners down at the close.
While BHP shares rose 0.7% to $37.49, shares in Rio fell 1.5% to end at $102.13 while Fortescue shares eased a cent to $17.70.