Steel mills in China increased production in April

Plants of the China Iron and Steel Association (Cisa) increased crude steel production to a record high at the end of April, as high profit margins and strong demand for steel prompted larger mills to increase production.

Production at the factories within Cisa rose 3.25% to 2.4 MTPD on April 21-30 from April 11-20. Production in the last 10-day period was 19.3% higher than a year earlier, when the Covid-19 lockdown slowed operations.

Cisa’s data includes over 100 of the country’s largest steel mills. His previous record was 10 days ago in mid-April.

The record production volume is due to the rise in steel and iron ore futures to record levels today.

October rebar futures on the Shanghai Futures Exchange rose from a maximum daily limit of 6% at RMB 340 per tonne to RMB 6,012 per tonne. October Hot Rolled Coil (HRC) futures also surged 6%, rising RMB 358 /t to RMB 6,335 /MT. China’s main iron ore futures contract rose by a daily limit of 10%.

Cisa mills steel inventories fell by April 30 to 13.41 million tonnes, down 15.69% from April 20, due to accelerated growth in steel consumption, according to Cisa data.

China’s total crude steel production rose to its second highest in March. China will report official steel production in April early next week.

China kicked off efforts to cut carbon emissions in steel with a call for production cuts in 2021, a nationwide study of capacity cuts and Tangshan’s annual caps aimed at improving the country’s air quality. But steel demand remains strong, and mills outside Tangshan are aggressively increasing production to offset local output constraints.

Rebar prices from the Shanghai warehouse as of May 7 rose 22% to 5,470 yuan /t, and HRC prices rose 32% to 6,060 yen /t. Billet prices from Tangshan ex-works are up 49% this year to 5,650 yen per tonne, 20 yuan per tonne below their all-time high of 5,670 yuan per tonne in November 2008.

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