China’s steel output stays high as cuts fail to bite

7-Jan-2019

Steel output at China’s largest mills has held well above year-earlier levels this winter, as looser restrictions have preserved output and worsened pollution.

Crude steel output over 11-20 December averaged 1.8368mn t/d, down by 5.8pc from the 11-20 November period, according to China iron and steel association (Cisa) data. Winter output restrictions starting in November have curbed steel output, but not by as much as a year earlier when output cuts were stricter. Cisa weekly output in November and December was 6-10pc higher than a year earlier, with production in the latest week 6.9pc higher than the 1.7181mn t/d average for 11-20 December 2017.

The figures cover output from Cisa’s members, including around 100 of the country’s largest steel mills, which have captured market share from smaller mills to send Cisa data higher. Its reported output hit an all-time high of 2.0026mn t/d in mid-May.

The higher steel output levels have contributed to poorer air quality in China this winter. China reduced PM2.5 particulate matter emissions by 25pc last winter, aided by strong winds, but emissions have increased this winter, partly because of less windy weather and partly as a result of the looser policies.

Tangshan is supposed to cut its PM2.5 by 4pc this winter, but its PM2.5 levels instead jumped by 45pc on the year in November. The city imposed temporary blanket cuts in December, but even those failed to lower Cisa output levels to 2017 levels.

Targets are measured on a six-month basis, so localities still have time to cut aggressively to meet the goals. It is that threat of cuts that has mill iron ore buyers hesitant to procure beyond immediate needs.

“Mills are afraid there might be new restriction notices in January, so have no plans to restock more medium and high grades,” a Hebei trader said.

Source: ARGUS MEDIA