SHANGHAI, Sep 18 (SMM) – Steel prices in the Chinese spot market are likely to weaken in the short term as Typhoon Mangkhut lowered demand in the south and as output recovers from environmental restrictions, SMM expects. Current low inventories will limit downward room in steel prices.

The typhoon shuttered most construction sites and factories on Guangdong’s coast during September 16-17. Production across most steel mills were little affected.

Data from the National Bureau of Statistics (NBS) showed that average daily output of pig iron and crude steel across Chinese steelmakers shrank in August, down 1.3% and 1.1% from July, respectively, due to production curbs by authorities.

Hebei’s Tangshan ordered steel mills, coke producers and utilities to cut output further from July 20-August 31, to control smog. That was on top of the capacity cuts across the city from March to November. Seven blast furnaces in Jiangxi’s Pingxiang suspended operation from August 6.

SMM learned that most mills in Tangshan and Pingxiang returned to normal operation earlier this month. This is set to grow production of pig iron and crude steel in September.

NBS data showed that China produced 80.33 million mt of crude steel in August, up 2.7% on a yearly basis with an average daily output of 2.59 million mt. Output in January-August came in at 617.4 million mt, up 5.8% from the same period last year.

Output of pig iron in August stood at 66.66 million mt, flat with a year ago, and daily output averaged 2.15 million mt. Year-to-date output was 512.27 million mt, some 0.8% higher than the corresponding period last year.