Chinese mills churned out 93.88 million tonnes (mn t) of crude steel in June’21, down by 6% as compared to 99.45 mn t produced a month ago, according to data released by the National Bureau of Statistics (NBS) today, 15 July’21.
The drop in production was mainly due to:
1. Production curbs- Chinese authorities have been taking strict measures since mid-June’21 in reducing carbon emissions in major industrial hubs like Tangshan, Jiangsu, Anhui and a few more. In addition to the above, steel output fell due to following reasons:
a) Holidays from 12 to 14 Jun’21 to celebrate the Dragon Boat Festival.
b) The mills were ordered to reduce their blast furnace activities a week before the China Communist Party’s (CCP) centennial celebrations on 1 July’21.
2. Seasonally weak demand- Another major reason was seasonal slowdown in demand with the onset of the monsoons in June’21. The construction activities as well as logistics remained disrupted due to heavy rainfalls and hot weather conditions.
3. Export tax concerns weigh on steel demand- The continued uncertainty surrounding the levy of the export tax by the Beijing government confused buyers both domestically and globally, keeping them on the side-lines.
However, in the first six months (H1) of CY’21 China’s crude steel production increased by 11.8% y-o-y to 563.33 mn t.
Outlook
Crude steel production may remain on a leash with the Chinese government’s efforts to restrict steel output to CY’20 levels.
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