China’s daily crude steel production extended its rebound in mid-October and reached 1.999 million tonnes, a five-month high.
It represents the second consecutive increase since early October, and a 4.3% increase from 1.9162 million tpd recorded in the first 10 days of the month, according to estimates released by the China Iron & Steel Assn (Cisa).
Production from Cisa members also increased 1.4% from early October to 1.606 million tpd.
“As steel product prices rebounded in September, steel mills produced more on increased orders,” an industry analyst in Beijing said.
“Steel mills, many of which only scaled back production partially, were quick to respond to price increases, so production went up fast,” a steel mill source in Shanghai said.
“The daily output figure is the seventh-highest number in history, and rebar futures on the Shanghai Futures Exchange (SHFE) reacted to the information and plunged further in the afternoon, on oversupply fears,” a trader in Shanghai said.
“Sluggish demand is the fundamental reason behind the correction in rebar futures,” he added.
The most-traded rebar contract on the SHFE settled at 3,648 yuan ($580) per tonne on Monday, down 29 yuan per tonne from last Friday.
“Increased supply, together with weak demand in winter, will likely pull back steel prices in November at the earliest,” the analyst said.