Signs of a pick-up in the Chinese property market saw steel production soar to a new high in February, despite government officials’ efforts to streamline the industry and reign in capacity.
On Tuesday the National Bureau of Statistics stated that crude steel output rose to an average of 2.21 million metric tons on a daily basis, breaking the previous record set in January of 2.05 million tons. The figure at the closing month of 2012 was 1.86 million tons, showing just how steep the incline in Chinese steel production has become.
This increase in output has been chiefly attributed to an increase in demand for steel, which itself has been caused by an increase in activity in steel-consuming industries such as automotive and property. The record activity in February is made even more notable by the fact that it comes after a short month with a week-long holiday as the Chinese markets shut down for New Year celebrations. The pace at which production has begun for 2013 demonstrates the Chinese steel producers’ eagerness to capitalise on rising prices.
However, there are concerns that the Chinese property market will face difficulties in the year ahead. Consumer inflation was up 3.2% in February compared with the same month last year, up 2% from January 2013, and growth in Chinese industrial production slowed to 9.9% in the first two months of this year. If the economy faces the headwind that the Chinese government appears to be anticipating – as it makes further efforts to trim capacity and consolidate the steel making industry – steel producers could be left with vast amounts of unsold stock.
As the year unfolds we will be watching the international steel markets with great interest, bringing you the latest developments and news as we get them.