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China’s Oct crude steel output extends dip on thinner margins, weak demand

China’s crude steel output fell for the fourth consecutive month in October, official data showed on Wednesday, as more mills implemented furnace maintenance amid thinning margins and disappointing demand in the peak consumption season.

The world’s largest steel producer manufactured 79.09 million metric tons of the metal last month, down 3.7% from 82.11 million tons in September, data from the National Bureau of Statistics (NBS) showed.

While a decline from September was expected, the drop was steeper than estimated, with production 1.8% lower than a year ago.

Analysts had pegged October output at between 80 million and 81 million tons, higher than 79.76 million tons in October 2022.
Average daily crude steel output was 2.55 million tons, down 6.8% from September and the lowest since December 2022 according to Reuters calculations based on official data.

Wider and deepening losses prompted some steelmakers to start annual maintenance on blast furnaces earlier than expected, contributing to lower output in October, said Cai Yongzheng, a Nanjing-based director of Jiangsu Fushi Data Research Institute.

Less than one-fifth of Chinese steel mills surveyed were operating at a profit by end-October, compared to around one-third in late September, data from consultancy Mysteel showed.

Daily hot metal output averaged 2.45 million tons in October, down 1.5% on the month but up 2.5% on the year, Mysteel data showed.

The provincial iron and steel association of southwestern Yunnan said in early October a few local mills had capped output to stem losses caused by surging production costs.

“Steel demand was weaker than expected before and after the Golden Week holiday break, worsening sentiment and resulting in falling steel prices,” said Xu Xiangchun, director of content at Mysteel.

In addition, some northern cities, including top steel production hub Tangshan, took measures to restrict output to control air pollution.

China produced 874.7 million tons of crude steel in the January-October period, up 1.4% from last year, NBS data showed.

Despite the declining output in recent months, analysts expect China’s total steel output in 2023 to be higher than last year given the lack of a government-mandated production cap in the previous two years to limit carbon emissions.
Source: Reuters (Reporting by Amy Lv and Dominique Patton in Beijing; Editing by Muralikumar Anantharaman and Varun H K)

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