Now for some more facts that again tell us that the Chinese steel industry isn’t falling in a heap, as we have heard time and time again this year (and for the past three years).
In fact China’s steel industry remains healthy and in full production – with daily output hitting a record high last month and June’s full month output within a whisker of May’s all time high.
Much of the extra steel is going into exports which jumped more than 33% in the first six months of the year.
Crude steel production in June was 69.3 million tonnes, up 4.5% from June 2013, but down 1.6% from May’s record 70.4 million tonnes.
No wonder Rio Tinto (RIO) could reveal a record level of iron ore sales and production yesterday for the June half year and June quarter.
And no wonder BHP Billiton (BHP) will reveal record iron ore production and sales when it reports next Wednesday.
And no wonder Fortescue (FMG) is confident of lifting production in 2014-15 to 160 million tonnes, instead of its planned 155 million tonnes.
For the first six months of the year, production rose 3% to 411.91 million tonnes – indicating the full year figure could reach as high as 830 million tonnes – another all time high.
A combination of rising domestic demand and surging exports has cut steel stocks in China. The steel industry says steel product inventories fell 11% last month to 6 million tonnes, a third lower than the 9.4 million tonnes reported in February.
The government reported last week that Chinese companies sold 41 million tonnes of steel products overseas, up 33.6% in the first half of this year, compared to the same period of 2013.
Daily steel output rose to 2.31 million tonnes in june, up from 2.27 million tonnes in May.
Last week’s import data showed iron ore imports dipped 3.6% in June to 74.57 million tonnes of iron ore.
But that was up 12 million tonnes, or 19% from the 62.3 million tonnes imported in June of last year.
Iron ore imports totalled 77.38 million tonnes in May, down 7.2% from April.
Total imports of iron ore in the six months to June were just over 457 million tonnes, up more than 74 million tonnes, or 19%.
Analysts say the high level of production (and associated iron ore imports) reflects the impact of the small extra spending measures from the Chinese government since March – April.
More important though was the way the industry has sustained production at near record levels, despite rising environment costs and pressures (plus moves by the central government to force older plants to close), the impact of the crack down on using commodities such as iron ore (and copper and gold and aluminium) as security in financial transactions, such as loans, the added pressure of a crackdown on the use of letters of credit in these dealings, and weak prices for finished steel, plus a shortage of cash in some industries, such as residential construction.
Some analysts reckon there’s the usual stockpiling of steel ahead of the usual slowdown in demand for steel over summer, but the fact that the daily production was a record in June tells us that there’s of sign of that happening, yet.
