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UPDATE 1-China's June daily steel output at new high - stats bureau
July 16, 2014 / 2:35 AM / 3 years ago

UPDATE 1-China's June daily steel output at new high - stats bureau

* Daily output up 1.8 percent compared to May

* Monthly production at 69.3 million tonnes, down 1.6 pct from May’s record

* Prices suggest little improvement in underlying demand (Recasts to focus on daily production rates)

BEIJING, July 16 (Reuters) - China’s daily crude steel output rose 1.8 percent in June to hit a record 2.31 million tonnes, defying any seasonal downturn in demand, data from the statistics bureau showed on Wednesday.

Total output over the month reached 69.3 million tonnes, up 4.5 percent from the same month last year but dipping 1.6 percent from May’s record high.

On an annualised basis, output amounted to 828.6 million tonnes, according to Reuters calculations, which would represent a 6.3 increase on last year.

Despite soaring environmental costs, persistent overcapacity and widespread cash shortages throughout the Chinese steel sector, output has remained strong, with little indication that mills are adjusting production rates in anticipation of a summer slowdown in demand over summer.

“The rise in new export orders together with an improvement in demand have dragged production up,” analysts at the Tangshan-based consultancy said in a note.

However, the consultancy warned that there were no obvious signs that the increase in steel demand was being reflected by price increases, and more policy support would be needed to keep the momentum going over the next few months.

Steel product inventories fell over the course of June, according to the SteelHome consultancy, with rebar stocks SH-TOT-RBARINV dropping more than 11 percent to end the month at 5.98 million tonnes. Rebar stocks had surged to as high as 9.4 million tonnes in February.

With domestic demand still relatively weak, the sector has benefited from an improvement in exports. In the first half of the year, China sold 41 million tonnes of steel products overseas, up 33.6 percent compared to the same period of 2013.

The China Iron and Steel Association (CISA) warned in a research report earlier this month that apparent steel consumption in China was rising far more slowly than production, and by May had actually declined for four consecutive months.

It said 97.2 percent of additional output over the first five months of the year was diverted into exports. (Reporting by David Stanway; Editing by Ed Davies)

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