In what is no doubt unwelcomed news from the rest of the world, November saw China’s steel mills boost their monthly output at the fastest rate in two years. An increase in infrastructure demand has encouraged producers to raise their production levels for the ninth consecutive month, despite coal prices continuing to harm expenses.
Steel output rose 5 percent to 66.29 million tonnes year-on-year, the fastest growth since June 2014, according to data released by the National Bureau of Statistics, on Tuesday.
Although soaring costs of key raw materials, like coking coal and iron ore, have eroded margins, steel mills were still making a profit of between 200-600 yuan ($28.98-86.95) per ton, said Wang Yilin, senior steel analyst at Sinosteel Futures. "Steel mills want to increase production because of the big profit margins," she said. "The steel market has also been driven by strong infrastructure demand, as Beijing has approved more projects this year."
However, compared with October output dropped by 3.24 percent, which is fairly common around November due to winter commonly being a low season for infrastructure and construction sectors. Analysts expect output to decline in December as mills undertake annual scheduled maintenance.
Total output for the first 11 months of 2016 edged up 1.1 percent to 738.94 million tonnes.
In 2015, China's output dropped for the first time since 1981 as weak metal prices and a government clampdown on excess capacity forced plants to shut or suspend operations.
Source: Reuters, 2016