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Chinese steel mills push output to 4th straight monthly high

China’s steel output rose in July to a fourth straight monthly record as mills ran full tilt to cash in on strong profit margins, despite anti-smog measures imposed by local governments. Data from the National Bureau of Statistics showed that mills in China, the world’s top steel producer, churned out 81.24 million tonnes of crude steel last month, up 1.3 percent from June and 7.2 percent from the same month last year. Year-to-date output to end-July grew 6.3 percent compared with the previous year to 532.85 million tonnes.

Mr Wang Yilin, an analyst at Sinosteel Futures said that “The reason we didn’t see declines in steel output amid the environmental crackdown is that steel mills have improved their production efficiency by using higher grades of iron ore and adding more scrap steel to churn out more products.”

According to analysts from Huatai Futures, Profit margins at Chinese steel mills touched around 1,100 yuan (USD 159.59) a tonne, near the record levels seen in December 2017. The margins are supported by strong demand from downstream users and ongoing supply-side reform, as well as environmental measures that have helped to eliminate low-cost producers from the market, the Huatai futures analysts said.
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