SHANGHAI, Apr. 13 (SMM) -- According to latest data released by the National Bureau of Statistics (NBS), China’s crude steel output was 61.48 million mt during March, up 3.9% YoY, while output of finished steel was 83.33 million mt, up 10.2% YoY. Crude steel output in March hit a record high, and average daily crude steel output also reached 1.9865 million mt, only following a record high of 1.997 million mt seen in June 2011. Meanwhile, average daily output of finished steel also hit a record high of 2.688 million mt. Profit margins at steel mills improved due to the gradual recovery of end-user demand and rising steel prices in March, and the commissioning of crude steel capacity accelerated in response. Steelease believes China’s average daily crude steel output in April will reach high.

First, according to a recent Steelease survey, the PMI for steel downstream industries was 56.51% during March, indicating the seasonal recovery of downstream industries helped drive up demand for steel products. Steelease predicts the PMI will remain above 50% in April, and downstream demand for steel products in April will be flat with March level. 

Second, steel mills raised ex-works prices in response to recent rises in steel prices, helping improve their profit margins and enable them to accelerate the commissioning of crude steel capacity. Steel mills that conducted unit maintenance previously also came back online. In the meantime, the Steelease survey shows that production schedules of steel products at key steel mills do not decline in April.

Third, cash liquidity may improve in April given weakening loan repayment pressures and the possibility of monetary easing.

However, latest data from the NBS also shows that the growth of investment in property development slowed in March, while fixed asset investments in railway and transportation projects also fell from 2011. Therefore, overall downstream demand for steel products remains pessimistic despite better operations in downstream industries and stronger downstream demand.