China's crude steel production rises by almost 7% y-o-y in Mar'23

China's crude steel production for March increased by 6.9% y-o-y to 95.73 million tonnes (mnt), as per data from National Bureau of Statistics (NBS). Crude steel production increased by 6.1% on the year to 261.56 mnt during January-March, 2023.

The national average daily crude steel output stood at 4.105 mnt during March, up by 17.5% from last year.

Factors driving production growth:

1. Chinese BF, EAF mills ramp up production: Chinese BF and EAF mills ramped up production in mid-March, as they could still earn some profits on finished steel sales.

Besides, March and April were usually "peak" months for steel consumption in China. This also gave domestic steelmakers some confidence to keep their production high.

2. Steel exports surge 50% y-o-y: China's steel exports surged 59.7% y-o-y to 7.89 mnt in March 2023 compared to 4.94 mnt of the same month of 2022.

Recovery in global steel demand led to spike in volumes during the period and Chinese mills offered at competitive prices compared to other countries.

3. Rise in automobile sales, production: Sales and production of automobiles throughout China during March increased by 24% and 27.2% y-o-y, respectively, according to latest data released by the China Association of Automobile Manufacturers (CAAM).

Outlook: China's steel production edged down by a little over 1% to 1,018 million tonnes (mnt) in Calendar Year 2022 against 1,033 mnt in the previous year. Production cuts by an estimated 2.5% figure is expected in CY23. However, China is yet to announce any decision on the same yet. A 2.5% reduction on CY22 levels will mean around 25 mnt axed to attain 993 mnt in CY23.