China’s daily crude steel output fell m-o-m in Oct’21 to 2.31 million tonnes (mn t), its lowest since four years ago, in Dec’17. For the entire month of October, crude steel production fell 23.3% y-o-y to 71.58 mn t. This was also a straight fall for five months in a row, as per the figures revealed by the country’s National Bureau of Statistics.
Output over Jan-Oct’21, was at 877.05 mn t, down 0.7% y-o-y.
It may be recalled that China’s monthly crude steel production started dropping from July onwards after seeing a double-digit growth in the first half of the year. Over Jan-Jun’21, crude steel output was at 563.30 mn t, up 11.8% over the same period of CY’20. Strict crude steel output and power usage curbs are leading to a drop in output.
Pig iron
In Oct’21, China’s pig iron output was at 63.03 mn t, down 19.4% y-o-y. The average daily pig iron output in Oct’21 was 2.033 mn t, down 6.4% from the previous month. From Jan- Oct’21, pig iron output was at 734.07 mn t, down 3.2% y-o-y.
Finished steel
In Oct’21, China’s finished steel output was at 101.74 mn t, a y-o-y decrease of 14.9%. The average daily output of finished steel in October was 3.282 mn t, a m-o-m decrease of 3.4%. Over Jan-Oct’21, steel output touched 1,122.3 mnt, a y-o-y increase of 2.8%.
Declining demand and drop in raw material prices are the main reasons for the sharp drop in finished steel prices. Since the beginning of November, the main contract price of iron ore futures has fallen by RMB 72/t ($11/t), a drop of 11.64%.
BF capacity utilisation
The weekly capacity utilisation ration at 163 blast furnaces (BFs) across the country plunged to 62.39% as of early November as per Mysteel, when some heavily polluting industrial units had been closed to commemorate the centenary of the Chinese Communist Party in October.
Against the backdrop of reduced production, steel prices have started falling since more than a week while inventories have increased. The national comprehensive steel price index dropped w-o-w by 4.7% to RMB 5,423/t ($847/t) around a week back.
Way ahead
Even as coal production and supply have improved and prices cooled a bit, they are still likely to remain elevated till the year-end and, as a result, China’s energy curbs may continue with some easing. However, production cuts will continue. Moreover, China has entered the off-season for steel demand thanks to the onset of winter. That apart, The Carbon Peaking Action Plan by 2030 envisages restricting steel production and optimising the present capacity. Going forward, value-added and specialty steel will also change the production dynamics to a large extent.
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