BEIJING (Reuters) – China’s daily crude steel output hit a fresh record in June, even as Beijing ordered a series of environmental inspections at steel mills across the country.
Steel mills produced 80.2 million tonnes of crude steel last month, according to data from the National Bureau of Statistics. This was down 1.1 percent from May’s record 81.13 million tonnes, but June has one less day.
Daily average production in June hit 2.67 million tonnes, higher than May’s record of 2.62 million tonnes, according to Reuters’ calculations.
“Steel mills were dashing to reap as much of the bumper profits as they could despite environmental checks,” said Richard Lu, analyst at CRU in Beijing.
For the first half, China’s steel output of 451.16 million tonnes rose 6 percent from 419.75 million tonnes in same period last year.
Profit margins for steel have risen strongly due to firm demand and the country’s smog battling capacity curbs.
Lu estimated that mills were currently earning a profit margin of about 800 yuan ($119.50) per ton of steel, while analysts at Huatai Futures put profit margins for mills in northern China at over 1,000 yuan a ton.
Beijing last month sent teams of inspectors to 10 regions, including the top steelmaking provinces Hebei and Jiangsu, to revisit the sites of thousands of violations uncovered by earlier probes, and said it will expand environmental checks to more cities and regions through to April next year.
Analysts also expect more cities to adopt stringent production curbs. Last week, top steelmaking city Tangshan had ordered mills to cut production for 6 weeks over summer.
“Steel output may not necessarily go down even though stricter restrictions are on the way,” said Lu. “Steel mills in Xuzhou city could reopen soon, which will to some extent offset the production curbs in Tangshan.”
Utilization rates at blast furnaces at steel mills across the country fell 0.69 percentage points to 70.86 percent last week from a week earlier, dented by regional inspections in northwestern China and scheduled equipment maintenance.
Production of coke, a raw material used in steelmaking, fell 4.7 percent in June to 36.13 million tonnes compared to the same period last year because of the environmental and safety checks.
For the first half year, coke output fell 3.2 percent to 212 million tonnes from a year earlier.
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