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China’s steel output in early Nov down 20% on year: CISA

China’s daily crude steel output in early November was 20% lower year on year, to be slightly above October’s average, according to China Iron & Steel Association.

Industry sources expected China’s steel production to remain low through November-December, but said it may rebound in early 2022 after steelmakers complete mandatory output cuts by the end of December.

CISA estimated China’s daily crude steel output over Nov. 1-10 averaged 2.343 million mt/day, up 1.5% from October but still the second lowest level since March 2018.

Besides weak steel demand, China’s mandatory requirements to keep 2021 steel output within 2020 levels were the major reason behind low steel production.

Steel mills in northern China, especially in the Hebei province, will continue to conduct winter steel output cuts over January-March 2022, but other parts of China could be allowed to ramp up production to at least the level of a year ago.

Hebei has pledged to keep its crude steel output from Jan. 1 to March 15 at 70% of the level seen in the same period of 2021. Output at that level during those three months, if realized, would be higher than the current level.

According to sources, average blast furnace utilization rates in Hebei’s Tangshan and Handan cities, two major steelmaking hubs in China, were at below 65% and 70%, respectively, as of mid-November.

Meanwhile, oversupply concerns have emerged amid expectations of soft end-user demand in Q1 2022.

Market sources said while property construction was likely to deteriorate in Q1 2022 due to poor home sales and land purchases in 2021, steel production on the contrary may increase.

Some sources said both traders and end-users were not interested in restocking, as steel market may continue trending downwards amid oversupply in the first quarter of 2022.

Although daily crude steel output in early November was almost 20% lower on year, combined finished steel inventories at steel mills and spot markets monitored by CISA, as of Nov. 10, were still 0.1% higher on year at 22.91 million mt, indicating dip in steel demand still outstripped that in production.
Source:Platts

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