China’s crude steel production rose by 5.6% on the year to 168.7 million tonnes (mnt) during January-February 2023, as per data from National Bureau of Statistics (NBS).
The national average daily crude steel output stood at 2.859 mnt during the period, up 13.8% from last year.
Factors driving production growth:
1. Increase in capacity utilisation: Domestic steel demand improved as market participants returned after the Lantern Festival. This encouraged mills in East and North China to bring back some of the blast furnaces (BFs) on stream during the period. The BF capacity utilisation rose for the fifth straight consecutive week to 84.93% over the week 3-9 February, 2023. In addition, the electric arc furnace (EAF) mills’ capacity utilisation rate recovered to 57.94% as of 2 March.
2. Steel exports surge 50% y-o-y: China’s steel exports recorded an increase of 49% y-o-y to 12.19 mnt in January-February as against 8.18 mnt in the same period last ago. Recovery in global steel demand has led to the spike in volumes during the period and Chinese mills offered at competitive prices compared with other countries.
3. Funding scenario improves: Both RMB loans and loans to the real economy have increased, as per data released, while household deposits have increased significantly, reflecting relatively conservative consumption. In February, RMB loans increased by 1.81 trillion, an increase of RMB 592.8 billion y-o-y. According to preliminary statistics, the increase in the scale of social financing in February was RMB 3.16 trillion, RMB 1.95 trillion more than in the same period last year. In February, RMB loans issued to the real economy increased by RMB 1.82 trillion, an increase of RMB 924.1 billion y-o-y.
4. Improved downstream demand: Downstream steel demand is also recovering, especially from the construction sector. In particular, projects under construction in the Yangtze River Delta region are driving steel demand. Sales and production of automobiles throughout China during February increased by 13.5% and 11.9% on year respectively, according to latest data released by the China Association of Automobile Manufacturers (CAAM) on 10 March.
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