More good news for our iron ore exporters.
China lifted crude steel production by more than 2% in the month of March and in the quarter, according to production data released in Beijing on Wednesday.
Crude steel output in March was 70.3 million tonnes, up 12% from the 62 million tonne estimated for February, when production was disrupted by the week-long New Year holiday.
The small rise again confounds some of the bears who reckoned earlier this year that Chinese steel production would struggle – its not growing as quickly as it did a year ago.
But it is growing a touch faster than the level of growth in the economy (1.4% quarter on quarter) and faster than the quarterly rise in industrial production – which is down on a year ago.
March’s total was also up 2.4% from March 2013 and was the highest so far in 2014. January production was 68.7 million tonnes.
All up Chinese crude steel production rose to 202.7 million tonnes in the quarter – up 2.2% from a year earlier.
As we pointed out on Monday, and again this morning, Chinese customs data revealed that iron ore imports jumped 21% to 73.96 million tonnes last month, from 61.24 million tonnes in February. Imports were almost 15% above the level for March 2013.
First-quarter imports surged 19.4% to 222 million tonnes from the same period of last year.
Shipments hit a record high of 86.82 million tonnes in January, as steelmakers built stocks ahead of the Lunar New Year shutdown.
The crude steel data adds to our understanding as to why BHP Billiton (in particular), Rio Tinto and Fortescue had such solid first quarter performances.
The question now for investors is the sustainability of this improvement in steel output and whether it is responding to demand signals, or just steel mills producing metal to keep their plant operating to try and avoid even larger losses if they are forced to curtail production or close facilities.
The struggling real estate and property markets might be the first place any demand weakness for steel emerges from.
