While the daily crude steel in last December was 2.46 million tonnes/day, lower than 2.59 million t/d of last November, Mysteel calculated.
Last year’s on-year crude steel growth was impressive, industry watchers say, given that it was higher than the 5.7% increase the Chinese mills recorded for 2017 and was achieved despite the removal of another 30 million tonnes/year of excess steel capacity nationwide during the course of the year.
By the end of 2018, China’s steel industry had removed some 150 million tonnes/year steel of capacity since 2016, basically fulfilling the capacity reduction target the central government had earlier set the industry. The China Iron & Steel Association had previously noted that the steel industry had met the government’s target two years ahead of schedule.
At its annual meeting held in Beijing on January 15, CISA officials explained that the continuing increase in steel output last year was to cater to the growth in steel demand following the removal of “substandard” steel products from the market such as those made by induction furnaces, a process now outlawed in China.
A Shanghai-based steel analyst added that some steelmakers are smashing production records by adjusting their raw materials mix – to include more high-grade iron ore, for example – to help meet strong demand market when some mills in North China have had to adhere to production curbs on their blast furnaces beginning in some cases from as early as last November.
Indeed, the annual average capacity utilization rate of blast furnaces at the 163 Chinese steel plants Mysteel checks reached 76.36% in 2018, which was lower than the 81.8% average recorded in 2017, according to Mysteel’s database.
Moreover, the handsome margins available for much of last year were doubtless also a driver for steelmakers pushing up their production, Mysteel notes. Chinese domestic steel prices stayed at high levels during all but the last two months of last year, with the annual average price of the national HRB 400 20mm dia rebar benchmark as at end-December up by Yuan 292/tonne ($43/t) or 7.4% on year at Yuan 4,245/t including the 16% VAT.
For example, China's largest listed steelmaker, Baoshan Iron and Steel Co, has predicted that its net profit for 2018 will increase by 8%-12% on year to over Yuan 20 billion, a record high, thanks to favourable steel prices and its success in bettering its production goals, its latest post disclosed on January 19.
In parallel, the NBS data showed that China’s finished steel output during 2018 also showed an 8.5% on-year increase to 1.1 billion tonnes in 2018. Finished steel output last December grew by 9.1% on year to 93.65 million tonnes, NBS noted.
