China’s crude steel output rose in late February in line with an improvement in steel margins as post-Lunar New Year domestic construction activity ramped up — contributing to a build-up of steel inventories that is likely to pressure Chinese hot-rolled coil and rebar prices in March, according to S&P Global Platts Analytics.
Total steel output averaged 2.95 million mt/day over Feb. 20-28, up 6.13% year on year and edging up 0.48% from Feb. 10-20, according to China Iron and Steel Association data. Crude steel produced by CISA members averaged 2.32 million mt/day over the 10-day period, up 14.07% on the year and up 0.85% from Feb. 10-20.
The government of the steelmaking hub of Tangshan city in Hebei province ordered industrial activity to be wound back to improve air quality during key national government meetings in Beijing that began March 4. This includes the temporary closure of seven blast furnaces in the city in March.
However, S&P Global Platts Analytics does not expect the output reduction to have any material impact on overall production levels, as it will affect less than 4 million mt of capacity. Platts Analytics also forecasts China’s overall pig iron capacity will increase about 11 million mt/year, or 30,000 mt/day, in the first half of 2021, due to the commissioning of new blast furnaces.
More worrisome is the pace of steel inventory build. As steel mills typically continue to operate over the Lunar New Year holidays while downstream demand slows, it is natural for stocks to rise. Market inventories of key steel products in 20 cities monitored by CISA reached 16.95 million mt at the end of February, up 14.6% from mid-February but more significantly up 132% from the start of the year.
Source : https://www.hellenicshippingnews.com