China’s steel output fell in July, but only by less than 1% as many recently announced output reductions had still not been implemented.
Daily crude steel production averaged about 1.99 million tonnes, down 0.85% from 2.007 million tonnes in the previous month, according to figures from the National Bureau of Statistics (NBS), as low prices finally prompted steelmakers to trim output.
From the end of July, many of the country’s biggest steelmakers unveiled plans to bring forward maintenance periods in a bid to cut losses and ease oversupply.
“The July output has not reflected the function of maintenances, since most will happen in August and September,” a trader in Shanghai said.
The July figure remains higher than the average of 1.969 million tonnes for all of January to July, underlining the threat posed by overproduction at a time when prices have collapsed to multi-year lows.
July output was also 4.2% higher year-on-year at 61.69 million tonnes.
It will take time for steel mills to reduce production to a reasonable level, according to market participants. Traders expect daily crude steel output to fall to about 1.9 million tonnes or lower in September.
The NBS figure was higher than the steel production estimate produced by the China Iron and Steel Assn (Cisa) for July. Cisa assessed average daily output at 1.967 million tonnes.