Steel Prices: China’s Steel Output Reaches Another Record

China’s steel production hit another record in August, as steel producers ramped up their output due to improving margins and an expected environmental crackdown on output later in the year.

According to the country’s statistics bureau, crude steel output climbed to 74.59 million metric tons in August, surpassing the previous peak of 74.02 million reached in July. The August measure is an all-time high for the month, but it is still below June’s production.

China’s steel demand has rallied this year, while it was previously expected that it would slow down later in the year as the country’s government-backed stimulus programs came to a close, China’s economic growth has continued, sparking increased demand for steel.

On the supply side, a government crackdown on illegal mills removed some supply from the market. Meanwhile, supply is expected to tighten later in the year as the government forces production cutbacks as part of its winter anti-pollution curbs.

Meanwhile, as China’s appetite for steel has rallied, U.S. steelmakers have not been seeing too many benefits. American steel mills shipped 7.48 million tons of steel in July, down 3.3% from the previous month but up 1.7% year-over-year according to the American Iron and Steel Institute.

So far this year, domestic steelmakers have shipped out about 52.9 million tons of steel, a 2.8% increase over the 51.4 million tons shipped during the first seven months of 2016. While China’s demand for steel has rallied, stateside things have been steady, but not great, and China isn’t a big market for U.S. steel imports.

On the other hand, the U.S. is a huge market for Chinese imports, and in some cases, China has been unfairly subsidizing its domestic steel producers, which has enabled them to ship steel into U.S. at prices the domestic makers can’t compete with. Some duties have been applied to certain Chinese steel imports, but U.S. steelmakers contend that further action is needed to help out the domestic industry.

Leia Toovey has a B.Sc. in geology from Simon Fraser University, and her degree had a focus on resource economics. Out of school, she started working in the booming mining industry of Vancouver, Canada, covering junior mining stocks and commodities including potash, copper, nickel, oil and gold. Then she moved to New York and worked as a commodities analyst covering a breadth of commodities, from the Baltic Dry Index through the softs. As a geologist she has a greater understanding of the exploration and extraction side of commodities, and how changes in technology and the depletion of resources impact pricing. At Economic Calendar she covers a variety of commodities, providing daily technical and fundamental analysis and assessing major market developments.