Posted on 21 Oct 2014

China Sept daily steel output up 1pc on month

China's daily crude steel runs reached 2.25 million tonnes in September, up 1 percent from August and the highest since the record 2.31 million tonnes in June, suggesting mills were still at close to full capacity despite a long price slump.

China produced 67.54 million tonnes of crude steel in September, down 2 percent compared to the previous month and flat compared to the corresponding month of 2013, data from the National Bureau of Statistics showed on Tuesday.

Output over the first three quarters of the year reached 618 million tonnes, up 2.3 percent compared to last year, the National Bureau of Statistics said.

Based on the September daily runs, steel output will hit 821.25 million tonnes on an annualised basis, up 5.4 percent from the official 2013 rate, according to Reuters calculations, though production figures for last year have been revised upwards.

Weak demand has aggravated longstanding overcapacity problems in the sector, and while there are few indications that conditions will improve in the final quarter of the year, steel firms have continued to pursue a strategy based on outlasting rivals and maintaining market share, analysts have said.

While production has remained close to record highs, the China Iron and Steel Association (CISA) said last month that apparent steel demand actually fell in the first eight months of 2014, with all additional production over the period diverted to the export market.

With little sign of life in downstream steel-consuming sectors, prices continued to plummet over September, with rebar futures in Shanghai dropping 13 percent over the month.

Mounting losses and financing problems have already forced a number of steel producers to halt their operations, but the impact on overall output has been negligible, with other mills stepping in to fill the gap.

October production also appears to be holding up, with the most recent CISA data showing daily output from large steel mills reached 1.804 million tonnes in the first 10 days of the month, up 0.8 percent from September 21-30.

Many in the sector are now hoping that efforts to guarantee air quality during the Asia-Pacific Economic Cooperation (APEC) summit in Beijing in early November will serve to reduce supply and provide a short-term boost to prices.