China: Crude steel production drops slightly after hitting record high in Aug '20

China's crude steel output moved down marginally by 2% to 92.56 mn t in Sep '20 after hitting an all-time high at 94.85 mn t in Aug '20, per the data released by National Bureau of Statistics (NBS).

Last month, the nation had recorded an all-time high production on robust demand and government initiative on stimulus packages.

Factors that weighed on the crude steel output-

• Curbs imposed to control air pollution- The Tangshan government announced a fresh round of production curb restricting Blast furnace activities to 45% for the mills falling under B and C category. The production curb shall continue from Oct '20 until Mar '21 to lower the autumn-winter air pollution in the region.
  
  
• Softening demand led to a decline in domestic prices- Bad weather conditions and fluctuating downstream demand weighed on the domestic finished steel market prices. Also, the market participants slowed their procurement rates mid-month ahead of the Golden week (1-8 Oct) holidays. Domestic HRC prices in Eastern-China witnessed a significant fall of RMB 230-240/t m-o-m to RMB 3,810-3,830/t towards the end of Sep in contrast with RMB 4,040-4,070/t at the beginning of the month.
  
  

The steel manufacturers had produced a record high volume of crude steel in Aug '20, which resulted in an increase in the inventories. This in turn resulted in a fall in prices.

However, the crude steel output increased annually by 12% as against 82.77 mn t in Sep '19. Also, in Jan-Sep '20 the output stood at 783.63 mn t, up by 5% over 746.80 mn t in the corresponding months of the previous year.