China’s crude steel production witnessed a surprising 1.6% rise in the first two months of 2024 compared to the same period last year, defying expectations of a decline amid low-demand conditions and widespread maintenance activities within the steel industry. Official data released by the National Bureau of Statistics (NBS) revealed that China, the world’s largest steel producer, manufactured 167.96 million metric tons of crude steel during January and February.
Although the NBS data from March 2023 reported a higher output of 168.7 million tons for the corresponding months in 2023, analysts attribute the unexpected increase in 2024 to a potential revision in last year’s data. The NBS did not provide specific details on any data revisions or respond immediately to inquiries seeking clarification.
China’s practice of combining January and February data aims to mitigate disruptions caused by the Lunar New Year holiday, which varies annually. The average daily crude steel output for the period stood at around 2.8 million tons, reflecting fluctuations compared to previous months and years.
Despite a decline in January’s output, global steel association data indicated a 6.9% decrease to 77.2 million tons, analysts noted factors contributing to the unexpected annual rise in steel production. Strong steel exports during January and February, reaching 15.91 million tons and marking the highest level since 2016, likely influenced plant utilization rates and output levels.
The surge in steel exports, coupled with subdued domestic demand, resulted in inventory build-up and declining steel prices during the period. Anticipating a reduction in March output, analysts highlighted production cuts by some mills due to financial losses from high inventories and weakening market prices amid sluggish demand conditions.
Amidst these dynamics, challenges persist for certain steelmakers in China, with reports of severe losses on steel stocks prompting production adjustments and strategic responses to navigate market uncertainties.