Chinese mills are producing more steel than a year earlier as a credit-fueled property boom drives domestic demand, defying calls for curbs to supply that has flooded world markets.
Crude-steel output totaled 603.78 million tonnes in the first nine months, up 0.4 percent from a year earlier, according to data from the Chinese Bureau of Statistics yesterday.
Supply was 68.17 million tonnes last month from 68.57 million in August, and was up 3.9 percent from a year earlier, the data showed.
After Chinese mills churned out less steel on an annual basis last year for the first time in more than three decades, predictions were widespread that output would show a significant drop this year. Instead, the country that supplies half the world’s steel has fired up plants as policymakers added stimulus, boosting demand, and a price rebound improved profitability.
“Investment in real-estate and infrastructure sectors has been much better than we expected,” Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking (ANZ) Group Ltd, said by e-mail.
The bank said that Chinese production could rise 3 percent this year, reversing a forecast made at the start of the year for a 5 percent drop.
Steel output will probably stay high, as consumption typically rises this month, the China Iron & Steel Association said on its Web site last week.
As winter approaches and the country steps up efforts to cut overcapacity in its steel sector, production will probably fall over time, the group said.
The output increase comes in the face of calls for a reduction in supply that has hurt producers from India to the US.
The deluge has spurred protectionist moves from rival mills and drawn attention from G20 leaders, who have pledged to address overcapacity.
