Crude Steel Production by China Hit 9-Month Low in Dec '18

SEATTLE (Scrap Monster): The latest production statistics published by the Chinese National Bureau of Statistics (NBS) suggests substantial drop in crude steel production by the country during the last month of the previous year.

The Dec ’18 crude steel output totaled 76.12 million tonnes (Mt), down by almost 2% from the prior month. Also, this is the lowest monthly production since March this year. The average daily steel output by China registered a decline of nearly 5% from the prior month to 2.46 Mt, the lowest level since March ’18.

The huge drop in production is mainly attributed to the slowdown in economic growth by the country. The GDP growth at 6.4% during the fourth quarter of 2018 was the slowest in nearly a decade. Also, the yearly GDP growth at 6.6% was the lowest since 1990. The winter steel inventory build remained weak in 2018. The steel mill profits too have plunged by more than 60% since November.

The full year 2018 crude steel production by the country totaled 928.26 Mt, significantly higher by 6.6% from 2017. The total finished steel output rose 8.5% to 1.1 billion tonnes in 2018. Also, pig iron production was up by 3% at 771.05 Mt during the year.

As per estimates, the Chinese steel output is likely to decline to total around 900 Mt in 2019, due to fall in demand from major sectors including property, automobiles and energy. The proposed measures by the Ministry of Environment to fight pollution may also lead to drop in steel output in 2019.

Meantime, Morgan Stanley believes that the Chinese steel sector has bottomed out. It predicts very strong steel demand in 2019.