China: Crude steel production rises in H1CY23

According to National Bureau of Statistics data, during H1CY'23 (January-June), China's crude steel output increased by 1.3% y-o-y to 535.64 million tones (mnt). China's crude steel output increased by 0.4% y-o-y to 91.11 (mnt) in June'23 from 90.73 mnt in June'22. Moreover, crude steel production increased by 1.1 % m-o-m from 90.12 mnt in May.

The average daily crude steel production stood at 3.034 mnt, up 4.5% y-o-y from 2.91 mnt in May.

China's blast furnace steel mills saw increased profit margins in June, thanks to reduced production costs and higher prices for finished steel. Mysteel's survey of 91 mills found that profits from rebar sales averaged RMB 84/t ($12/t), compared to a loss of RMB 52/t ($7/t) in May. Profits from sales of hot-rolled coil (HRC) were also higher, with an increase of RMB 154/t ($21/t) compared to the previous month.

Outlook

Despite the city of Tangshan requiring steel mills to reduce their sintering-linked production by 30% to 50% to improve air quality, analysts expect steel output to increase in July.

China is looking to introduce a "flat control" policy in steel in the second half (H2) of the current calendar. This means the country is targeting a flat growth in steel production. The production cuts in H2 will thus balance out the higher production in H1.