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Member mills of the China Iron & Steel Assn (Cisa) produced an average of 1.7224 million tpd of crude steel during the last eleven days of last month, down 3.6% from the preceding ten-day period, according to data released by the industry body on Friday January 9.
Cisa members, which are mostly medium-sized and large mills, account for roughly 80% of the country’s total steel output.
“Some mills cut down production at the end of the year as they were not very optimistic about the outlook for the winter, particularly due to the uncertainties that had revolved around the country’s export tax rebate policy. They were worried that the removal of the rebates could put downward pressure on the market,” a Hebei-based mill source told Steel First.
Apart from that, falling spot prices also dampened mills' production interest, according to a Shanghai-based analyst at Metal Bulletin Research, a sister company of Steel First’s.
Northern Chinese rebar prices were at 2,420-2,500 yuan ($394-407) per tonne on January 2, down 70-110 yuan ($11-18) per tonne from December 19 levels, according to Steel First’s price archive.
As at January 4, the average blast furnace utilisation rate in the country’s steelmaking hub of Hebei province stood at 92.06%, down from 93.02% on December 19, according to market sources.
Meanwhile, Cisa member mills’ combined finished steel inventory was at 13.242 million tonnes as at December 31, down 1.64 million tonnes – or 11% – from December 20 levels, according to data from the association.
China’s crude steel output retreated in late December following consecutive increases that began in mid-November.