22/06/2016 - 12:49

Better year forming for Chinese steel

22/06/2016 - 12:49

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Chinese steel production was up 1.8 per cent in the month of May compared with the same period last year, although global output was down 0.1 per cent.

Chinese steel production is one key number that impacts Australia's iron ore industry.

Chinese steel production was up 1.8 per cent in the month of May compared with the same period last year, although global output was down 0.1 per cent.

At 70.5 million tonnes, China produced more than half of all steel in the 65-nation World Steel Association, at 139.1mt.

March and April were also better months for Chinese producers than they had been in 2015.

But for the five months to May, Chinese production of 329mt was down 1.4 per cent on last year.

A further problem is that Chinese capacity is reportedly 1.2 billion tonnes per annum, while its run rate for this year will be in the order of 800mt.

That means there’s a dramatic excess capacity across the industry, pushing down prices and devaluing existing mills.

India and Pakistan were both bright spots from an Australian perspective.

Indian production was up 4.9 per cent on May last year, to 8mt.

That puts the subcontinent squarely in third place in world production, with Japan in second.

Evidence suggests that number will continue to rise, however, as steel intensity generally accelerates as a country reaches a certain level of per capita income.

Pakistan grew 33.6 per cent on a low base to 350,000 tonnes.

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