China: Crude steel production declines y-o-y in Q1'CY24

China's crude steel production for Q1 CY'24 (January-March 2024) decreased by 1.9% y-o-y to 256.55 million tonnes (mnt) as compared to 261.68 mnt in Q1 CY'23, as per the data provided by the National Bureau of Statistics (NBS). Moreover, the same declined by 7.8% y-o-y to 88.27 mnt in March 2024 against 95.73 mnt in March 2023.

Production cut: In mid-March, steel industry groups from several provinces in China requested that steel mills voluntarily cut back on production. This request comes after a continued drop in steel prices, which has pressured profits for steelmakers and effected confidence in the market.

Weaker domestic demand: A slowdown in real estate investment has hampered the overall recovery in steel demand. This has led to recurring imbalances between supply and demand, causing steel prices to dip.

However, the price of steelmaking raw materials dropped sharply, Chinese steelmakers faced pressure after the Lunar New Year holiday because demand did not pick up as expected. On top of that, many steel mills were stuck with large stockpiles of steel they produced at high costs.

Outlook: In April 2024 the steel output is expected to rise. This is due to signs of improvement in downstream steel demand, leading some mills to restart production after maintenance. Additionally, the government's decision to manage crude steel output this year offers hope for industry improvement.

Moreover, China's steel demand will remain stable for CY'24 at 895.7 mnt, according to the World Steel Association's (WSA) short range outlook. While real estate investment is expected to decline, growth in infrastructure and manufacturing is forecast to pick up, contributing to overall economic stability.