keywords :
China’s daily pig iron and crude steel output during Jan. 1-20 retreated from December 2021 levels, according to the China Iron & Steel Association.
A few industry sources were skeptical about the output fall, but said they expected some notable output decline that would begin from late-January as steel output cuts widen in China’s Hebei province.
The CISA said Jan. 25 that China’s pig iron and crude steel output averaged 2.097 million mt/d and 2.526 million mt/d Jan. 1-20, down 9.8% and 9.2%, respectively, from December 2021 levels. The pig iron and crude steel output numbers were also 14.5% and 14.8% lower on the year, respectively.
Finished steel inventories at steel mills and spot markets monitored by the CISA were 3.6% lower on the year at 21.89 million mt as of Jan. 20.
Some market sources said they did not hear about any regions intensifying steel output cuts in early and mid-January.
On the contrary, a few mill sources said they had ramped up production since late-December 2021 or the start of January after they completed the mandatory steel output cut requirements for 2021 — a move mostly aimed at containing carbon emissions.
One of the mill sources said most mills across China should have increased pig iron and crude steel production in January, as steel profit margins were healthy and government interventions aimed at output were less stringent than in November-December 2021.
China’s domestic rebar and hot rolled coil sales profit margins averaged $99/mt and $110/mt Jan. 1-20, according to S&P Global Platts data.
Despite healthy margins, China’s crude steel output is expected to trend down from late-January to mid-February, according to industry sources.
This would be partly as independent electric arc furnace steelmakers have gradually suspended production ahead of the Lunar New Year holidays and will not resume production until mid-February.
Moreover, Hebei province’s Tangshan and Handan cities have planned to reduce their blast furnace utilization rates between Jan. 30 and Feb. 20 to guarantee improved air quality ahead of the Winter Olympics, which is set to begin from Feb. 4 in Beijing.
The utilization rates were currently at 70% in the two cities. A few mills will have to reduce rates to as low as 50% during the Olympics, according to some market sources and the Tangshan government announcement.
Tangshan and Handan are China’s largest steelmaking hubs.
Steel output cuts in Hebei were expected to provide some upward momentum to prices after the Lunar New Year holidays, some traders said.
But as China has put economic growth as its top priority in 2022, a few of the traders said overall steel output cuts outside of Hebei will be less stringent in 2022 than in 2021.
Source: Platts