China Daily Crude Steel Output to Drop Slightly in May-Shanghai Metals Market

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China Daily Crude Steel Output to Drop Slightly in May

SMM Insight 05:14:19PM May 15, 2012 Source:SMM

SHANGHAI, May 15 (SMM) – Data from National Bureau of Statistics show crude steel output grew 2.6% YoY to 60.575 million mt in April, while steel products output climbed 7.9% to 81.07 million mt. Daily crude steel output hit 2.019 million mt, a record high, which Steelease attributes to a pick up in construction demand and forced operation of some large SOEs who have been running at zero profits or even losses. Steelease expects China’s daily crude steel output to drop slightly in May, however, mainly based on following considerations:

Firstly, according to Steelease surveys, the PMI of steel downstream dropped 3.79% MoM, or 1.46% YoY, to 52.72% in April, indicating slowing of recovery in downstream sectors. Steelease also discovers most downstream businesses are still pessimistic, and, facing tight cash flow, have been cautious towards purchases.

Secondly, due to falling steel prices, steel mills have successively lowered their ex-works prices, pressing profits to near none at some private steel mills. Their production interest therefore has dropped. China still maintains high steel stocks. Excessive supply consequently will continue to weigh on steel prices in May. There are already steel mills planning output cuts in May, Steelease surveys reveal.

Thirdly, China’s fixed asset investment growth for real estate dropped by a noticeable 4.8 percentage points to 18.7% during the first four months. Steel demand growth of the real estate sector will continue to slow as China maintains curb on the real estate sector.

Key Words:  China   crude steel   output 

China Daily Crude Steel Output to Drop Slightly in May

SMM Insight 05:14:19PM May 15, 2012 Source:SMM

SHANGHAI, May 15 (SMM) – Data from National Bureau of Statistics show crude steel output grew 2.6% YoY to 60.575 million mt in April, while steel products output climbed 7.9% to 81.07 million mt. Daily crude steel output hit 2.019 million mt, a record high, which Steelease attributes to a pick up in construction demand and forced operation of some large SOEs who have been running at zero profits or even losses. Steelease expects China’s daily crude steel output to drop slightly in May, however, mainly based on following considerations:

Firstly, according to Steelease surveys, the PMI of steel downstream dropped 3.79% MoM, or 1.46% YoY, to 52.72% in April, indicating slowing of recovery in downstream sectors. Steelease also discovers most downstream businesses are still pessimistic, and, facing tight cash flow, have been cautious towards purchases.

Secondly, due to falling steel prices, steel mills have successively lowered their ex-works prices, pressing profits to near none at some private steel mills. Their production interest therefore has dropped. China still maintains high steel stocks. Excessive supply consequently will continue to weigh on steel prices in May. There are already steel mills planning output cuts in May, Steelease surveys reveal.

Thirdly, China’s fixed asset investment growth for real estate dropped by a noticeable 4.8 percentage points to 18.7% during the first four months. Steel demand growth of the real estate sector will continue to slow as China maintains curb on the real estate sector.

Key Words:  China   crude steel   output