China's pig iron output down 11.1% y-o-y in August

China's pig iron ore output recorded an 11.1% on-year decline in August to reach around 71.53 million tonnes, according to new data released by the country's National Bureau of Statistics (NBS) on September 15. Though the volume was also down by 1.8% from July and marked the third straight monthly fall, last month's decline was smaller than the 13.2% on-year tumble in production of crude steel in August, the data also showed.

Last month's decline lowered the pace of growth in output for the January-August period to only 0.6%, with the total volume reaching 605.4 million tonnes, the NBS data show. The pace was much slower than the 5.3% on-year rise in the country's crude steel output over the first eight months.

Inevitably, daily pig iron production also declined last month to an average of 2.31 million tonnes/day, or down 1.8% on month and refreshing the low since last March, Mysteel Global calculated based on the data.

"The decline means that steelmakers are strictly trimming their output, which they have to do to comply with Beijing's directive to lower this year's steel output from 2020," a Shanghai-based analyst commented.

Mysteel's data showed the same trend, with the blast furnace capacity utilization rate among the 247 blast-furnace mills surveyed across China declining further to 85.3% as of August 26 from 86.83% on July 29. The rate was also 9.34 percentage points lower on year.

The lower pig iron output among domestic steelmakers last month saw their demand for raw materials, especially iron ore, shrink markedly. This in turn dragged iron ore prices down further, Mysteel Global observed.

Mysteel's SEADEX 62% Fe Australian fines plunged to as low as $129.25/dmt CFR Qingdao on August 19, as against $180.2/dmt on July 30. The index then recovered to $151.55/dmt by August 31 but was still down $28.65/dmt from July 30.

Nevertheless, the reduction in steel supply did lend some support to domestic steel prices, with the national price of HRB400E 20mm dia rebar under Mysteel's assessment averaging Yuan 5,320/tonne ($825/t) including the 13% VAT in August, or up Yuan 77/t on month.

Written by Victoria Zou, zyongjia@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.