China’s crude steel output in April fell 2.6% from the previous month and dropped 7.2% from the previous year, missing market expectations, according to data from the National Bureau of Statistics (NBS).
Many market participants had forecast a monthly rise in steel production, citing improved downstream demand and profitability that encouraged steelmakers to ramp up production last month. However, China, the world’s largest steel producer, manufactured only 85.94 million metric tons of crude steel in April.
“The monthly change is really out of our expectation,” said Pei Hao, a Shanghai-based analyst at international brokerage Freight Investor Services (FIS). Pei explained that the recovery in downstream demand came later than expected this spring, which is different from last year when production ramp-up started in March, contributing to the year-on-year fall in output.
The shorter length of April compared to March was also cited as a possible factor contributing to the lower monthly output.
In the first four months of 2024, China produced 343.67 million tons of crude steel, down 3% year-on-year. Analysts expect output to pick up in May as more mills resume production, driven by resilient demand and improving consumption prospects.
However, Chu Xinli, a Shanghai-based analyst at China Futures, said that even without nationwide government-mandated production restrictions, this year’s annual output is likely to be no higher than the 2023 level, given the obvious decline in the first four months.
China’s state planner, which announced in early April that it would continue to manage crude steel output in 2024, has yet to unveil details on the timing and scale of production limits.