China: Crude steel output up m-o-m in May'24 as demand, exports rise

China's crude steel production for May 2024 increased by 8.1% m-o-m to 92.86 million tonnes (mnt) as compared to 85.94 mnt in April 2024, as per data provided by the National Bureau of Statistics (NBS). The main reason for the monthly increase is decent domestic demand and strong exports. Moreover, the same edged up by 2.7% y-o-y as compared to 90.4 mnt in May 2023.

During January-May 2024, crude steel production fell by 1.4% reaching 438.61 mnt compared to approximately 444.8 mnt in January-May 2023.

Factors behind growth in output:

• Modest recovery in domestic steel demand: China's domestic steel market experienced a modest recovery in May. This uptick was driven by supportive government policies, relatively stable end-user demand, and cost-control measures that improved industry resilience.
  
  
• Steel exports show m-o-m growth: China's steel exports witnessed a growth of 5% m-o-m in May 2024, reaching 9.63 mnt as compared to 9.22 mnt in April 2024, as per the General Administration of Customs. Driven by price advantages as compared to other countries and relatively sufficient orders from previous bookings, Chinese steel exports in May 2024 continued to show a m-o-m growth trend.
  
  

Increased domestic demand and robust exports fuelled a rise in China's crude steel production in May. This uptick was further supported by the resumption of production at some electric-arc-furnace mills and a general increase in blast furnace activity.

Reflecting these positive trends, profitability within the steel sector improved, with an average of 53% of mills operating at a profit in May compared to 45% in April.

Outlook

While China's overall economic recovery is on track, challenges like insufficient domestic demand persist. Despite a complex external environment and potentially weaker cost support, expectations of continued positive macro policies and seasonal production trends suggest China's crude steel production in June might see further growth, albeit with some uncertainties.