China cuts steel output again as Covid zero, property crisis sap demand

December 15, 2022 (MLN): China’s steel production fell again last month as mills cut output to stem losses and cope with a slide in demand, as reported by Bloomberg on Thursday. 

Nationwide virus controls, the ongoing property crisis, and the start of winter pollution curbs continued to keep the steel industry on the back foot in November and leave production on course for a second consecutive annual decline, it added.

While iron ore prices have rallied sharply in recent weeks in anticipation of China’s reopening, a pick up in end-use will depend on government stimulus measures and a stabilization in the real estate market, as well as clearing the worst of the current wave of Covid infections.

Production dropped to 74.5 million tons in November, down 6.5% on October and the weakest figure reported this year, although it was higher than a year ago. Over the first 11 months, output has fallen 1.4% from 2021 levels, in line with the government’s directive to cap emissions from the highly pollutive sector, it noted. 

Beijing released two plans in November to boost the real estate market and ease some of its virus restrictions, with the latter since superseded by a more rapid rollback of Covid Zero. Neither had much effect on November’s activity data, which saw China’s housing market continue to slump amid a worsening in other economic markers from retail sales to industrial output.

Elsewhere, aluminum output in November rose on a daily basis as higher runs in Guangxi and Sichuan provinces offset cuts elsewhere to control winter pollution, according to a survey from Shanghai Metals Market.

Heating fuel output continued to rise as markets headed into the winter and coal hubs saw fewer virus restrictions. Production of both coal and natural gas reached their highest levels since March, with the cumulative total for coal so far this year topping 4 billion tons and setting a new annual record with one month still to go, it further stated. 

Copyright Mettis Link News