China’s crude steel production dropped by 4.3% in November compared to October, driven by lower profit margins and seasonal weakening in demand, according to official data released on Monday.
The National Bureau of Statistics (NBS) reported that the world’s largest steel producer manufactured 78.4 million metric tons of crude steel last month, down from 81.88 million tons in October.
This suggested an average daily output of 2.61 million tons, slightly lower than 2.64 million tons in October and 2.54 million tons in November 2023, based on Reuters’ analysis of the NBS data.
“The month-on-month fall in output in November is mainly because steel margins had been squeezed by diminishing seasonal demand and resilient iron ore prices,” said Ge Xin, deputy director at consultancy Lange Steel.
LSEG data showed that steel rebar prices slipped 2.1% in November, while iron ore prices gained 3.1% over the same period, Pointing to tighter margins.
By the end of November, only half of China’s steel mills were operating at a profit, a decline from roughly two-third in late October, according to data.
“Steel consumption has contracted since the middle of November, and this is especially the case in the northern region where cold weather disrupted construction activities,” Ge Xin said.
November’s crude steel output increased by 2.5% compared to the same month last year but is expected to decline further in December due to annual maintenance at some mills. Despite this, analysts anticipate December’s output will surpass December 2023 levels.
Ge Xin expected a decline in China’s total crude steel output in 2024 by around 2% from 2023.