Chinese steelmakers cut output in May

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Daily production of crude steel eased to 1.975 million tonnes, down 2.2% from April, but 1.64% higher year-on-year, according to the National Bureau of Statistics (NBS).

“It is wise for steel mills to reduce production at moment since most have been suffering from the downturn in the market,” a trader in Shanghai said.

The higher output in April put a lot of downward pressure on spot market prices, which have been on the decline since mid-April.

But there needs to be further production cuts in coming months so that a balance can be reached with the comparatively weak demand, market participants said.

According to NBS figures, total production for May was up 1.1 % month-on-month and also 2.5% higher year-on-year at 61.23 million tonnes, which yields an annualised output of 735 million tonnes.

China Iron & Steel Assn’s estimate last week for daily crude steel output in May was 2.01 million tonnes, down from the historical high of 2.03 million tonnes in April.

Production for the first five months of 2012 also rose 2.2% year-on-year to 296 million tonnes, the NBS said.