China's crude steel production declines over 9% y-o-y in Jul'24 amid weak domestic demand

China's crude steel production for July 2024 stood at 82.94 million tonnes (mnt) reflecting a 9% y-o-y decline as compared to 90.8 mnt in July 2023, as per data provided by the National Bureau of Statistics (NBS). Moreover, the same fell by 9% m-o-m against 91.61 mnt a month ago.

During January-July 2024, crude steel production dropped by 3% y-o-y reaching 609.6 mnt compared to 629.36 mnt in January-July 2023.

Factors behind drop in production

Steel demand: China's steel market faced challenges for the month. Steel demand dropped, causing a decline in the domestic market. This situation worsened due to severe weather conditions, including heavy rain and heatwaves. Meanwhile, steel futures on the Shanghai Futures Exchange fluctuated significantly.

Rise in Chinese steel exports: China's steel exports surged by 7.1% reaching 7.82 mnt in July 2024 against 7.31 mnt in the same period of last year. This increase in exports can be attributed to the competitive pricing of Chinese steel, which is now at its lowest levels in four years. With weak domestic demand compelling producers to focus on exports, there is potential for further growth in international markets if global demand rebounds.

Outlook

The domestic steel market is expected to remain constrained in the short term due to ongoing economic uncertainties, weakening construction activities, and potential global economic slowdown effects. The combination of a steadily improving real estate market and consistent government investment in infrastructure could gradually stimulate increased steel production.