China: Crude steel production sees significant decline in Aug'24

China's crude steel production for August 2024 stood at 77.92 million tonnes (mnt), reflecting a 10.4% y-o-y decline compared to 86.41 mnt in August 2023, according to data from the National Bureau of Statistics (NBS). Additionally, production fell by 6.1% m-o-m compared to 82.94 mnt in July 2024.

During the January-August 2024 period, crude steel production dropped by 3.3% y-o-y to 691.41 mnt, compared to the same period last year.

Prices decline amid muted domestic demand

Domestic steel demand in China remained weak during August, primarily due to the ongoing slowdown in the real estate sector, a major consumer of steel. Government restrictions on developer financing have reduced demand for steel products such as H-beams and rebars. Finished steel prices ended the month lower, amid fluctuations, as spot sales remained listless due to high temperatures and frequent heavy rains across most regions.

Steel exports surge in August

China's steel exports increased by 14.7% y-o-y to 9.5 mnt in August 2024, compared to 8.3 mnt in August 2023, according to the General Administration of Customs. In January-August 2024, exports rose by 20.6% y-o-y to 70.58 mnt, compared to 59.46 mnt in the same period of the previous year. Competitive pricing and lower domestic demand have boosted China's steel export volumes.

Capacity utilisation rates drop

Capacity utilisation rates among blast furnace (BF) mills and electric arc furnace (EAF) mills declined in August, according to Mysteel's survey. Among 247 BF mills, rates slipped by 5.91% to 82.96%, while rates among 87 EAF mills declined by 11.42% to 30.53%.

Outlook

China has not announced the timing and scale of its steel output cap this year. However, the chairman of Baoshan Iron & Steel Co., the country's largest listed steelmaker, has said that flat production this year may not end oversupply.

Furthermore, China's steel industry continues to face challenges, with weak domestic demand and a slowing real estate sector exerting significant pressure. Increased exports have provided some relief, but the overall outlook for the industry remains uncertain.