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According to Platts, according to the China Iron and Steel Industry Association (CISA), as of November 9, daily crude steel production in China declined for the sixth straight month in October, falling 4.9% from the previous month and hitting a 44-month low.
Industry sources expected China's steel production to continue to fall in November as some steel mills were already operating at a loss.
However, steel prices in China continued to decline in November, indicating that steel demand fell faster than the rate of decline in production, the sources added.
According to CISA estimates, daily crude steel production in China in October fell 21.4% year-on-year to 2.338 million tonnes per day, the lowest level since March 2018.
Despite the rapid decline in steel production, cumulative stocks of finished steel in steel mills and spot markets monitored by CISA fell just 0.3% from the end of September to 22.53 million tonnes.
Insufficient demand for steel on the domestic market has led to the fact that some mills have been operating at a loss since November.
In addition to the nationwide steel production cuts required by Beijing to keep China's crude steel production in 2021 at 2020 levels, some mills in Shanxi recently began to cut pig iron production by more than 20,000 tonnes per day to minimize losses, some traders say. ... In September, Shanxi produced 4.747 million tons of pig iron, or 158,000 tons per day.
Meanwhile, while Tangshan City in Hebei Province recently loosened measures to cut steel production due to improved air quality, local steelmakers have been reluctant to ramp up production due to low margins or poor operations, the sources said.
Several sources in northern China said weaker steel production could provide some support for steel prices in late November. But any rebound in steel prices is likely to be limited as demand for construction steel in northern China has already entered the off-peak season due to cold winter weather, they said.
