China Crude Steel Output Maintains High Level in February

Chinese crude steel output decreased by 9.3% to 54.31million tonnes in February from January, according to Chinese government. The production turned down after 2 months with less operation days in February due to Chinese New Year holidays. Another background is that crude steel output hit monthly record high at 59.87 million tonnes in January. The production per day increased by 0.4% to 1.939 million tonnes in February from January. The operation was likely to be very strong in the last half of February.

By year-to-year comparison, crude steel production increased by 9.7% in February, plus for 4 consecutive months. The output accumulated 114.18 million tonnes for January-February, increasing by 12.6% from January-February 2010. The accumulation would equal to 685 million tonnes per year, the high level. Steel makers were likely to increase output when steel product prices surged in January.

The output of steel products decreased by 5.5% to 63.54 million tonnes in February from January, minus for 2 months in a row. Meanwhile, by year-to-year comparison, the output increased by 17.4%, plus for 25consecutive months. The average output per day increased by 4.5% to 2.269 million tonnes from January. The market inventory increased when domestic demand turned weak. Domestic steel market price is decreasing by loosening balance of supply and demand after mid February.

China’s pig iron output capacity was reduced by 121.72 million tonnes during 2006-2010 and steel making capacity was lowered by 69.69 million tonnes since the government led integration of aging and small equipments. Crude steel output totaled 626.7 million tonnes in 2010 against the country’s total capacity at above 700 million tonnes. The supply and demand gap is estimated at 100 million tonnes or more. Chinese government plans more shakeout of steel making equipments and concentration into large-scale steel makers in its 5-year policy for 2011-2015.