Industry News

Is China cutting its steel output? No!

September 12, 2018

Sanctions and pleas for a reduction in steel production do appear to have been listened to in China. September saw the country's output levels rise by 3.9% from a year previous but was down slightly on the August levels. The reason for the increase has been pinned on the countries increasing demand for real-estate and infrastructure investment. 

After the nation’s mills churned out less steel on year in 2015 for the first time in more than three decades, predictions were widespread that output would show a significant drop this year. Instead, the country that supplies half the world’s steel has fired up plants as policy makers added stimulus, boosting demand, and a price rebound improved profitability.

“Investment in real estate and infrastructure sectors has been much better than we expected,” Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group Ltd., said by e-mail. The bank’s predicting that Chinese production will rise 3 percent this year, reversing a forecast made at the start of 2016 for a 5 percent drop.

Based on this trend, it is probably a fair assumption to think that October will also not be a month where we see a decline. Real-Estate demand will remain unusually high, in addition to this; October is typically a month that sees high levels of steel consumption.