China August steel output falls from record as summer curbs bite

BEIJING (Reuters) - China’s steel output eased in August after hitting a record-high in July, crimped by tough production restrictions in major steelmaking regions as part of efforts to clear the country’s smoggy skies.

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The world’s biggest steel maker churned out 80.33 million tonnes of crude steel last month, according to data from the National Bureau of Statistics on Friday. That’s down 1.1 percent from a record 81.24 million tonnes in July, but still up 7.7 percent from 74.59 million tonnes in the same month last year.

Daily average output in August dipped from the previous month to 2.59 million tonnes, the lowest since April this year, according to Reuters calculations based on the official data.

The city of Tangshan, China’s No.1 steelmaking hub, ordered steel mills to cut output capacity by 30 percent to 50 percent over six weeks from July 20 to Aug. 31.

Utilisation rates at blast furnaces at steel mills across China fell to as low as 66.16 percent in mid-August, according to data compiled by Mysteel consultancy, a level not seen since early April.

“Steel output may rise slightly from September as some mills have resumed after summer maintenance, but room for output growth will be limited,” Zhao Yu, steel analyst at Huatai Futures, said before the data was released.

Last week, Tangshan extended summer output cuts across the steel, coke and power sectors into September.

The city of Linfen, a major coke making region, also introduced production restrictions on heavy industry to reduce harmful emissions. It has asked steel mills to halve their output capacity from early September to mid-November.

Steel mills are still enjoying strong margins as steel product inventory at Chinese traders remains around 10 million tonnes, suggesting firm demand and encouraging mills to ramp up output.

“There has been market talk of more strict environmental measures this winter. So construction sites are dashing to buy more steel products ... before winter curbs kick in in November,” said Zhao.

For the first eight months of the year, China’s steel output increased 5.8 percent to 617.4 million tonnes, according to the statistics bureau data.

Reporting by Muyu Xu and Josephine Mason; Editing by Joseph Radford