China steel output recovers as market reacts to economic stimulus

As a result, steel output rose more than 6% in October.

China’s steel output rebounded in October, ending four straight months of declines, as market sentiment improved on Beijing’s efforts to boost economic growth, according to Bloomberg.

Better profits helped steelmakers increase monthly output for the first time since May. Steel output reached 81.88 million tons, up 6.2% from September and 2.9% from a year earlier, according to data released by the National Bureau of Statistics on Friday (Nov. 15).

The increase narrows the cumulative output decline in the first 10 months of the year compared to 2023 to 3%. This suggests the steel industry is still on track to surpass the 1 billion-tonne mark for a fifth consecutive year at the current production pace.

While many mills are still incurring losses and the property sector continues to hold back demand, analysts see rising orders from state-backed manufacturing and construction, along with rising exports. However, the long-term outlook for the industry remains bleak.

The China Steel Association has urged mills to maintain production discipline after the price hike, warning that fundamentals have not really changed. The government has signaled the possibility of more stimulus next year, but these are unlikely to revive traditional sources of market demand such as new housing starts and large-scale infrastructure, which consume a lot of steel.

For other materials, aluminum output rose 1.6% year-on-year to 3.72 million tonnes, near the record set in August, as seasonal demand for the light metal picked up.

Mills resumed some of their previously idled capacity, while new plants also came online to meet the extra demand, according to Shanghai Metals Market.

Coal output rose 4.6% and natural gas rose 8.4% — as China maintained ample supplies ahead of peak winter demand. However, refineries cut runs due to low margins, causing crude oil output to fall 4.6%.

Iron ore prices are currently trading around $100 a tonne amid weak demand. Iron ore volumes at Chinese ports have risen over the past four weeks to their highest since early September. Cyclically, inventories are now at their highest ever for this time of year.

Vietnambiz