SHANGHAI, Mar. 7 (SMM) – According to the China Iron & Steel Association (CISA), domestic daily average crude steel output in late February was 2.03 million mt, up 1.4% compared to ten days earlier, and hit a new high since June 2012. February is a traditional low demand period for steel, and combined with the Chinese New Year holiday factor, end-user demand was sluggish. But due to optimistic market early this year and rising steel market before the holiday, steel plants raised output. Since end-user demand has yet to improve, and since China’s additional regulations towards the real estate sector were released, and since China’s central bank controls liquidity, the overall steel market is pessimistic, falling since late February.

Domestic major steel plants had been major driving force of crude steel output growth, but due to low demand and growing inventories, they slowed production during the Chinese New Year holiday. Nevertheless, none-CISA members began to release capacity, causing crude steel output to increase in late February. The CISA anticipates daily average crude steel output at medium-to-large enterprises will be 1.73 million mt in late February, up 0.8% from ten days ago. Daily average crude steel output at none-CISA enterprises will grow 5% from ten days ago.

Domestic outdoor construction commenced in early March, and end-user demand also improved. But due to fresh regulations to the real estate sector, the market lacks confidence. Besides, the government set economic growth target at 7.5% this year, and the target for fixed-assets investment growth at 18%. Given oversupply, domestic crude steel output should remain high in future. But the onset of traditional high demand season for steel will give a support to steel prices. However, when steel prices will move higher will depend on demand.

Steel daily output hit a new high, but the market remains sluggish. In this context, demand for silicomanganese alloy was still weak. Steel plants continued to pull down procurement prices.

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