China reduced steel production by 1.4% y/y in January-May

In January-May 2024, Chinese steel companies reduced steel production by 1.4% compared to the same period in 2023, to 438.61 million tons. This is reported by XM with reference to data from the National Bureau of Statistics of China (NBS).

In May 2024, China increased steel production by 8.1% compared to the previous month, and by 2.7% compared to May 2023 – up to 92.86 million tons. May’s production is the highest monthly figure since March 2023 and exceeds analysts’ expectations of 87-90 million tons.

Average daily steel production in May reached about 3 million tons, up from 2.86 million tons in April and 2.91 million tons in May 2023.

«The main reason for the growth is strong domestic demand combined with an increase in exports,» said Chu Xinli, an analyst at China Futures.

China’s steel exports in May increased by 4.4% month-on-month to 9.63 million tons.

«Some electric arc furnace steelmakers resumed production in May. At the same time, blast furnace steel mills also increased production last month, partly due to rising steel prices,» said Jiang Zhenzhen, an analyst at CRU Group.

According to Mysteel, an average of 53% of steel mills operated at a profit in May, up from 45% in April.

In June, steel production in China is expected to decline as demand will be constrained by unfavorable weather conditions, which is a seasonal factor, and lower margins. The China Investment Bank CICC predicts that in 2024, steel production by Chinese steelmakers will fall by 1.1% y/y, while real steel demand will decline by 1.2% y/y.

As GMK Center reported earlier, China produced 1.019 billion tons of steel in 2023, up 0.6% from 2022. Thus, the downward trend in the country’s steel industry has stopped after two consecutive years of declining production.

Last year, the Chinese authorities did not impose restrictions on steel production in line with their ambitions to reduce CO2 emissions, which contributed to an increase in production and revenue of local steelmakers. This year, the Chinese government plans to continue the practice of regulating steel production, but the extent and timing are not yet known.

China’s steel exports in 2023 increased by 36.2% y/y – to 90.3 million tons. Steel imports amounted to 7.64 million tons, down 27.6% y/y. Ore imports increased by 6.6% y/y – to 1.179 billion tons for the year.