China’s crude steel output in Nov ’20 was recorded at 87.7 mn t compared to 92.2 mn t in Oct ’20; registering a decline by 5%.
Major factors that affected the output are as follows-
Production curbs- Due to autumn-winter restrictions on production from Sep ’20 to March ‘21, mills have been unable to meet their production capacity. The Tangshan Govt. has ordered mills falling under B and C category to reduce their Blast furnace, Sintering and kiln related activities by about 45%, which has led to a decline in output for the second consecutive month.
Reduced demand from the construction sector- The demand from the construction sector declines with the fall in temperature. Further, there were fewer working days this month with the adverse weather conditions which could also be factored in for the dip in output volumes.
However, it is important to note that the crude steel output has increased by 9% annually in Nov ’20. During the eleven months (Jan-Nov) of CY ’20, the mills collectively produced 963.53 mn t of crude steel, up by 6% against 908.61 mn t in CPLY.
Will the decline continue in the upcoming months?
The mills generally cut their output in the last quarter of the year to compensate for the decline in demand in Dec-Feb months owing to the winter season. Further, there is an extended production curb until Mar ’21 in effect. These factors together might lead to reduced output from the mills.
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