STEEL NEWS

China reduced steel production in March by 1.7% year on year

According to Reuters, the volume of steel production in China in March decreased by 1.7% year on year, as the data showed on April 17, as factories reduced production due to high stocks and low profits amid the coronavirus pandemic. According to the National Bureau of Statistics (NBS), published on Friday, the world's largest steel producer produced 78.98 million tons of crude steel last month, compared with 80.33 million tons in March 2019. According to NBS, in the first quarter of this year, China produced 234.45 million tons of crude steel, which is 1.2% more than in the same period in 2019. The average daily production in March fell to 2.55 million tons, compared with 2.58 million tons in the first two months of this year, reaching the lowest average daily value from January-February 2019, according to Reuters calculations based on NBS data. The new coronavirus hit the steel sector, raising stocks in China to at least a 14-year high in mid-March amid falling demand domestically and abroad. Some firms have reduced production because profit margins have fallen, while measures to curb the spread of coronavirus have slowed any return to normal activities. Profit margins at some mills in eastern China, tracked by Jinrui futures, turned negative in the second half of February, while some listed companies reported a sharp drop in profit in the first quarter. However, steel production should not plummet even against a weak market, said Richard Lu, a Beijing CRU analyst. “The factories will continue production to maintain a reasonable cash flow,” said Lu, adding that the steelworkers have supported a rapid recovery in consumer demand. “The market also expects additional stimulus measures in the next period, which will strengthen steel prices,” he added.