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[Ferro-Alloys.com] Steel production hit a record 94.85 million mt in August, up 1.6% month on month and 8.4% higher year on year, National Bureau of Statistics data released Sept. 15 showed. Over January-August, output was up 3.7% on year at 688.89 million mt.
China's pig iron output edged up 0.5% on month and rose 5% on year to 78.55 million mt in August, taking total output over January-August to 589.4 million mt, up 3.4% on year.
However, crude steel production in the first 10 days of September averaged 2.96 million mt/day, down 0.6% from Aug. 20-31 but up 6.4% on the year, according to China Iron & Steel Association, or CISA, data.
CISA members accounted for 2.14 million mt/day of the Sept. 1-10 total, 6.7% higher than a year ago, and marking the 14th consecutive 10-day period of year-on-year increase.
The softening in early September from the month before was in line with market expectations, as many participants expect production peaked for the year in August and will edge lower for the rest of 2020.
This is because upward momentum in property and infrastructure, which account for over 55% of China's total steel consumption, has slowed.
Despite this, S&P Global Platts has upgraded its outlook for China's crude steel production in 2020 to between 1,035 million mt and 1,045 million mt, which would be 4%-5% on year growth. Platts' previous estimate for this year was 2% on year growth.
August is traditionally low demand season in the steel market due to hot summer weather and rains in southern China and strong steel production has resulted in climbing steel inventories. As of Sept. 10, long steel inventories in northern Beijing, eastern Hangzhou and southern Guangzhou were about 100%, 50% and 45% higher respectively than a year earlier.
CISA data shows that steel inventories for five major products in 20 Chinese cities reached 12.43 million mt over Sep. 1-10, up 0.6% compared with Aug. 31, but down 38.5% from the peak in early March.
Some market sources said strong steel production in August was driven mainly by market anticipation that China's property and infrastructure sectors would see further stimulus in the following months, which now seems not to be the case.
Some sources noted that high long steel inventories could provide the biggest downward pressure on the steel market this year and may prompt traders to destock.
Rebar and hot-rolled coil inventories stood at 6.59 million mt and 1.86 million mt respectively Sept.10, up 1.5% and 2.8% compared with late August, according to CISA.
One Shanghai-based analyst said HRC would perform better than rebar in Q4 due to the recovering manufacturing industry and pick-up in exports. Domestic car and home appliance markets were also improving.
Source: S&P Global Platts
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