No wonder iron ore prices are at their highest levels for nearly a year as a shortfall in supply from Brazil and surging demand for steel from China’s construction sector sent China’s crude steel output to an all-time high in May.
Output rose 8.5% to an all-time high of 92.27 million tonnes in May from a month thanks to strong demand from the construction sector (cement output jumped more than 8% last month as well).
On an annual basis, May output was up 4.2% from a year earlier, according to the National Bureau of Statistics production data for May.
In the first five months of the year, China crude steel output rose 1.9% to 411.75 million tonnes, up 1.9% from the same period in 2019, having made up for the slide in output February and March.
Reuters said that its calculation showed an average daily output of the metal of a record 2.98 million tonnes in May compared with 2.83 million tonnes in April.
The surge in production came amid continuously falling inventories and firm demand from infrastructure projects and a resilient property market, with the world’s second-biggest economy back in business after emerging from coronavirus lockdown curbs.
Capacity utilisation rates at blast furnaces in 247 mills across China surged to a high 91.4% as of May 29, compared with 81.7% at end-April, according to consultancy Mysteel.
A slight fall in imports in May and a rise in steel output saw iron roe stocks fall further to just over 107 million tonnes last week from 109 million at the end of May.
China’s iron ore imports in May dropped 9% from April but were up on May a year ago even though prices rose 20% in the month to end above $US100 a tonne (for 62% Fe fines).
China’s General Administration of Customs data for May revealed that iron ore imports totalled a still high 87.03 million tonnes of iron ore last month That compared with the near-record 95.71 million tonnes imported in April and was up 3.9% from May 2019.
For the first five months of the year, arrivals of the steelmaking raw material were 445.31 million tonnes up 5.1% on the same period in 2019. Imports for the first four months of 2020 were up 5.3% from a year earlier.
The price of 62% Fe iron ore fines delivered to northern China fell 1.4% to $US103.44 a tonne on Monday, according to the Metal Bulletin.
