Shanghai, May 15 (SMM) - According to the National Bureau of Statistics, Chinese crude steel output was 60.575 million mt in April, up 2.6% YoY, and finished steel output was 81.07 million mt, up 7.9% YoY. The daily crude steel output reached up to 2.019 million mt, a new record high. Supported by the recovery in the construction sector, a large number of private steel mills have ramped up production in April. Besides, state-owned steel mills report no production cuts or halts, despite of no profits or slight losses at some mills. Both helped Chinese daily crude steel output reach a new high in April. Steelease, however, expects slight declines in domestic daily crude steel output in May due to the following three factors.
First, the Steelease survey of major steel downstream industries shows that the steel-PMI came in at 52.72% in April, down 3.79% MoM, and down 1.46% YoY, suggesting the recovery is slowing. Most of downstream enterprises are pessimistic towards the outlook in May, according to our survey. With cash flow pressures, many of them are wary of raw material purchases.
Second, domestic steel mills have cut ex-works prices following recent price losses, squeezing profits at mills. Some private mills with little profits have shown lower enthusiasm in production. Steelease takes a pessimistic output towards domestic steel prices in May, given high stocks and weak consumption. According to Steelease sources, planned output for May at some steel mills is down slightly.
Third, the growth of fixed-assets investment in the domestic property market was 18.7% during the first four months of 2012, down 4.8 percentage points over the growth during the first three months of 2012. With the absence of easing policy, the growth of demand for steel products will continue to fall in the property sector, which is a leading consumer of steel products.