China’s steel production finally jumped from the doldrums at the start of this year in May, recording one of the biggest monthly rises in some time.
The country’s National Bureau of Statistics reported that crude steel output rose 8.1% to a high of 92.86 million tonnes, the highest monthly total in 14 months.
Analysts attributed the rise to stronger domestic demand and higher exports, with the latter playing the more important role.
Monthly production increased from 85.94 million tonnes in April and 90.1 million tonnes in May of last year.
The news had no impact on the iron ore price on Monday, with the SGX platform price down 2.5% to $US104.75 a tonne on Monday afternoon.
The figure topped all forecasts, which ranged from 87 to 90 million tonnes, and represented a daily production figure of around 3 million tonnes, up from 2.86 million tonnes in April and 2.91 million a year earlier.
Analysts also noted that there were few, if any, signs of government policy to limit carbon emissions by cutting coal production by 50 million tonnes this year.
The production total also helped explain why iron ore imports have remained above 100 million tonnes for the past three months, even though stocks at China’s 45 major ports were at two-year highs, above 144 million tonnes, as of last Thursday.
That was down 220,000 tonnes from the previous week. To put that in perspective, the fall was equivalent to one fewer large shipment from Port Hedland in May.
Steel exports jumped by 4.45% from April to 9.63 million tonnes in May, according to customs administration figures released earlier this month.
Exports for the first five months of this year saw a massive increase of 24.7% to 44.66 million tonnes, up from 35.82 million tonnes (adjusted from 36.37 million tonnes) in the first five months of 2023.
"Some electric-arc-furnace-based steelmakers resumed production, and steel produced from the blast furnace process also picked up last month, partly driven by rising steel prices," Jiang Zhenzhen, an analyst at consultancy CRU Group, told Reuters.
The Mysteel website reported that an average of 53% of steel mills operated at a profit in May, compared to 45% in April.
China produced a total of 438.61 million tonnes of crude steel from January to May, down 1.4% year on year. However, iron ore imports were up 7% in the January-May period, reaching 513.75 million tonnes.
