Chinese steel production plunged in July to a
15-month low, according to Bloomberg calculations, as the industry begins to
make good on a pledge to reduce output below last year’s record
levels to restrain emissions.
The world’s top producer made 86.79 million tonnes
of crude steel last month, falling 7.6% from June and 8.4% from
93.36 million tonnes in July 2020, data from the National Bureau of Statistics
(NBS) showed on Monday.
Average daily output stood at 2.8 million tonnes last
month, according to Reuters calculations based on the NBS data, slipping 11%
from 3.13 million tonnes per day in June.
According to
Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were
changing hands for $163.52 a tonne, up 0.6% from Friday’s closing.
Since late
June, Beijing has dispatched inspection teams to local governments and mills to
check that cuts in steel capacity and output are being implemented,
shutting down outdated blast furnaces and limiting production at more heavily
polluting plants.
“(We) should focus on
reducing crude steel output at companies with poor environmental
performance, high energy consumption and outdated technology and equipment… and
to ensure 2020 crude steel output falls from a year earlier,”
the China Iron and Steel Association said in a statement.
The association and
analysts expect steel demand in China to cool during the second half
of the year due to slowing construction activity and still-tight semiconductor
supplies that are constraining manufacturing and metals demand in the auto
sector.
During the first seven
months of the year, China made 649.33 million tonnes of steel, up 8% from
the same period a year earlier, the statistics bureau said.
“We are seeing the
stacked effect of China’s de-carbonization efforts and uncertainty from covid
and global chip shortage,” said Tommy Xie, head of Greater China research at
Oversea-Chinese Banking Corp.
Confidence
China’s economy slowed
more than expected in July, adding to signs that the global recovery is coming
under pressure as the delta virus variant snarls supply chains and undermines
consumer confidence.
Retail sales were hit
by tough new virus restrictions introduced toward the end of the month to
contain fresh outbreaks. Flooding in central China and weak auto sales due to a
chip shortage hurt manufacturing, while a slowing property market and
environmental policies reduced output of steel and cement, hitting commodity
demand.
Retail sales rose 8.5%
y/y vs median estimate of 10.9%. Industrial production increased 6.4%
y/y vs median estimate of 7.9%.
Fu Linghui, a spokesman for the National Bureau of
Statistics said China will maintain a “stable recovery” in the second half of
the year, with the main indicators staying “within a reasonable range.”
“We continue to expect
a notable growth slowdown in the second half as Beijing leaves little space for
dialing back its unprecedented tightening measures on the property sector,”
said Lu Ting, chief China economist at Nomura Holdings Inc.
Mining.com