SHANGHAI, Nov. 10 (SMM) -- According to latest data from China’s National Bureau of Statistics, China’s crude steel output in October was 54.67 million mt, up 9.7% YoY. Output of finished steel was 73.07 million mt, up 13.4% YoY. Average daily crude steel output was 1.76 million mt, while average daily output of finished steel was 2.36 million mt.

Steelease believes average daily crude steel output in November will continue to fall slightly.

First, finished steel inventories remain huge, and inventories held by a number of traders for financing have not consumed by downstream enterprises yet. In this context, the finished steel destocking has not finished yet, and steel prices will likely fall further. In response, profit margins at steel mills will likely slip further, which will prompt steel mills to continue to cut production in November. However, iron ore prices have experienced significant declines in response to falling steel prices, and profit margins at steel mills recovered slightly due to lower raw material costs, so large-scale production cuts at steel mills will be unlikely.

Second, downstream demand has not improved fundamentally despite slightly eased monetary policy in China. The PMI of steel downstream industries was 46.23% in October, down 0.5% from September. The sluggish downstream demand will eventually affect production at steel mills.