China churns out record daily steel output in June - Reuters calculation

BEIJING (Reuters) - China’s daily crude steel output rose to record levels in June, according to Reuters calculations, even as anti-pollution production curbs pushed whole-month production slightly lower, official data showed on Monday.

FILE PHOTO: Workers check on seamless steel pipes at a factory of a steel products manufacturer in Cangzhou, Hebei province, China December 16, 2018. REUTERS/Stringer/File Photo

The world’s biggest steel producer churned out 87.53 million tonnes of crude steel last month, data from the National Bureau of Statistics (NBS) showed. That was down from a record 89.09 million tonnes in May - the first monthly drop this year - as the government stepped up its drive to cut smog, but still well above 80.2 million tonnes in June 2018 as daily output grew.

Average daily output of steel was around 2.92 million tonnes, calculations showed, compared with 2.87 million tonnes in May.

The monthly drop for June came as the smog-prone northern province of Hebei, which accounts for a quarter of China’s total steel output, ordered local governments to bring forward capacity cuts and anti-pollution measures to meet annual air quality targets.

The Hebei cities of Handan and Tangshan extended production curbs until August.

Analysts expect the restrictions, if fully implemented, will have a bigger impact than curbs usually imposed in winter to restrict smog, and will trim blast furnace operations by around 40% in the region.

Utilization rates at Chinese steel mills fell to 66.02% as of July 12, the lowest level since late March, data compiled by consultancy Mysteel showed.

At blast furnaces in Tangshan, China’s top steelmaking city, those rates are expected to hover at around 61% in July and August, analysts estimate. That compares to an average of 75.6% in the city in the first half this year.

On Saturday, an environmental official said at a conference that China will continue to enforce production restrictions in heavy industry in winter this year, and will tighten its emissions assessment on steel mills when granting exemptions from curbs already in place.

Meanwhile, the chairman of the China Iron and Steel Association (CISA) told the same conference demand was being driven by sustained government investment in the construction sector.

“Nearly 98% of the increase in steel production in the first five months flew into the domestic market,” He Wenbo said. “Steel output is not determined by producers, but downstream users in the market,” he added.

Reporting by Muyu Xu and Tom Daly; Editing by Kenneth Maxwell