Shanghai-based MySteel has reported an April increase in the amount of steel being produced in the People’s Republic of China. Summarizing an April 11 survey, MySteel writes, “Daily crude steel output among China’s 247 blast-furnace and 71 electric arc furnace (EAF) steel producers grew steadily to a three-month high of 2.67 million metric tons per day” during the first 10 days of April.
MySteel points to a “recovery in demand” in China and a belief among mills that a profit margin is attainable.
China suffered a severe drop in manufacturing and construction activity in the first quarter of 2020, with some analysts predicting a 6.5 percent drop in GDP for the quarter from one year earlier. The country’s National Bureau of Statistics has acknowledged a 20 percent year-on-year decline in retail sales in the first two months of 2020. (That same bureau will release its GDP figures for March and the first quarter on Friday, April 17.)
Throughout that time, however, China—which makes half of the world’s steel—appears not to have curtailed its finished and semi-finished steel output.
In February 2020, China’s most severe COVID-19 coronavirus-related lockdown month, the nation’s mills churned out 5 percent more steel than they did in February 2019.
By mid-February, before COVID-19 began curtailing manufacturing and construction activity in Europe and North America, media reports were portraying a glut of steel in China.
Now, as steelmakers in North America and Europe scale back production to prevent their own glut, China’s producers seem poised to flood the global market. MySteel says its survey for early April found “daily steel output [in China] gained another 47,100 metric tons per day, or 1.8 percent, compared to the last 11 days of March.”
According to MySteel, China’s own consumption of steel appears to have “returned to normal levels,” particularly for “construction steel comprising rebar, wire rod and bar-in-coil” based on a survey of some 237 trading and sales offices there.
Although China’s public health restrictions have eased somewhat, and its economy is reawakening in stages, at least one analyst is not convinced the nation has roared back to pre-COVID-19 conditions.
In his daily letters from Shanghai to customers, John Browning of BANDS financial portrays a city and nation still operating at reduced speed. Browning bases this in part on his own observations of sidewalk, highway, metro train and restaurant activity, but also on data points.
In his April 15 e-mailed letter, he writes, “News from Chinese high-frequency data is not good. Items like coal consumption for electricity production are down 20 percent from expected norms, which would paint a picture of a Chinese economy engaging at 70 to 90 percent of previous capacity.”
On the trade policy front, stainless steel is one source of concern, with stainless produced in Asia gaining the attention of European Union officials. According to a mid-April Reuters report, the European Commission has proposed anti-dumping duties on some stainless steel products arriving from China, Indonesia and Taiwan. The action reportedly follows an investigation that started nearly eight months ago.
Imposed EU duties on hot-rolled stainless steel sheets and coils include a 17 percent levy on shipments from two Indonesian subsidiaries of Chinese stainless steel maker Tsingshan Holding Group, according to Reuters.
Other mills and companies in China itself were hit with tariffs ranging from 14.5 to18.9 percent, while the duty on Taiwanese stainless was in the 6 to 7.5 percent range.