China daily steel output up 1.9 pct in early Feb –CISA
Tuesday, 21 February 2012 | 00:00
China's daily crude steel output rose 1.9 percent in the first 10 days of February, data from the China Iron & Steel Association (CISA) showed on Monday, as traders replenished their stockpiles following the lunar year holiday.
Daily runs reached 1.705 million tonnes over Feb. 1-10, up from 1.673 million tonnes during the Jan. 21-31 period.
Steel output in the world's biggest steel-producing country has remained at less than 1.7 million tonnes a day over the past three months following a decline in demand brought about by a slowdown in construction over the winter.
Traders and users started to replenish stockpiles after the lunar new year holiday in late January, encouraging steel mills to raise production in the hope that steel demand will pick up
in coming months.
"The restocking activities after the holiday encouraged steel mills to raise output, and we expect production to remain steady in the near term as demand is gradually picking up," said a Shanghai-based steel trader.
Inventories at key Chinese steel mills monitored by CISA reached 10.98 million tonnes by the end of January, the highest since the second half of 2009 and rising 24.5 percent from early
January, CISA said in a separate monthly report published on Monday.
Higher inventories have forced mills to deliver their products to the spot market, which could suppress any recovery in steel prices.
"We are seeing rising inventories... flowing to the market and the recent fall in steel prices has prompted traders to hold off making sales," the trader added.
The most-traded May rebar contract on the Shanghai Futures Exchange fell to a low of 4,168 yuan per tonne on Monday, close to over 6-week low hit last Friday.
Aggregate inventories of five major steel products -- rebar, heavy plate, hot-rolled coil, cold-rolled coil and wire rod -- stood at around 19 million tonnes by Feb. 17, up 796,400 tonnes
compared to a year ago.
"It will be difficult for demand to improve significantly during end February to early March, and inventories are likely to continue rising," CISA added.
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