China: Crude steel production drops 7% y-o-y in May’25

• Summer season weighs on domestic steel demand
• Drop in raw material prices helps mills offset losses

China’s crude steel production stood at 86.55 million tonnes (mnt) in May 2025, down by 6.9% y-o-y according to data released by the National Bureau of Statistics (NBS). On the contrary, production has risen by 1% m-o-m from April.

Crude steel production in January-May 2025 recorded a notional 1% y-o-y decline to 431.71 mnt as against 436.53 mnt in the same period last year.

Factors affecting output

Cautious sentiments in China: The market remained inactive for the initial 5 days of the month amid the Labour Day holidays. Whereas the post-holiday scenario was not very promising. The demand and activity improved but were short-lived. Seasonal slowdown in various steel-consuming sectors, especially the construction segment amid hot and humid summer conditions in the south and dry heat in the northern regions, further added to the woes.

Shift in focus to exports from domestic market: Taking into consideration the subdued in-house demand, Chinese mills and traders have been observed to have shifted their focus to the global trade space. China’s steel exports in May rose by 9.8% y-o-y to 10.58 mnt as compared to 9.63 mnt in May 2024. Meanwhile, renewed tariff uncertainties are posing challenges for exporters and can weigh on steel consumption, but still, Chinese mills and exporters find exports a better option amid low domestic sales.

Chinese BF steel mills report profits: On 12 June, some 58.4% of the 247 sampled BF steel mills reported making money when selling their finished steel, with the ratio lower by just 0.87 percentage points m-o-m. As per the survey report, the costs among domestic mills declined over the past month, as prices of raw materials such as iron ore and coke lost ground, in turn bolstering margins on finished steel sales. This has also helped producers offset the decline in finished steel prices to some extent.

Outlook
Production volumes might stay steady or drop in the near term, with seasonal slowdowns limiting price gains and consumption. The outlook remains cautious, and global trade faces rising challenges from tariffs and trade barriers.