Amid all the carnage from China’s production, investment and retail sales figures yesterday (not to mention the car sales and airline passenger figures last week), one figure stood out – China’s steel production, which indicates the continuing resilience of the sector.
Monday’s data from the National Bureau of Statistics (NBS) showed that while there were sharp falls in output across most industrial sectors in January and February, the production of crude steel actually rose – up by 3.1% year on year.
The NBS said output totalled 154.7 million tonnes in January and February. With the one week shutdown for the Lunar New Year in late January and the impact of the quarantines in February, the figure was a big surprise.
It indicates around 77 million tonnes in each month – but the holidays probably trimmed January’s figure back to closer to 70 million tonnes, meaning there could have been a big rise in February.
Seeing output in December was 84.27 million tonnes without the impact of holidays or the virus, a figure around this level in February could have been possible.
This January and February had one extra day because of the leap year but with crude steel production running around 2.5 million tonnes a day, that doesn’t wipe out the all the rise.
In contrast, the production of cement fell by almost 30% YoY, computers and mobile phones by 31% YoY and 34% YoY respectively and motor vehicles by 46% YoY.
There’s further evidence of the strength of the steel sector from China’s import data 10 days ago. That showed iron ore imports rose by 1.5% year on year to 176.84 million tonnes in January-February 2020 amid the Lunar New Year shutdown and coronavirus (2019-nCoV) spread.
Iron ore’s current resilience was underlined on Monday’s markets bloodbath when the price of 62% Fe fines delivered to northern China dipped less than 1% to remain over $US90 a tonne at $US90.88.
