BEIJING (Reuters) – China produced 69.42 million tonnes of crude steel in April, up 0.5 percent on the year, the statistics bureau said on Saturday, with mills defying a sector slowdown in order to take advantage of higher profit margins.
China has faced growing international pressure to tackle a colossal capacity glut in the steel sector, and aims to shut 100-150 million tonnes of surplus production in the coming five years.
But rising prices have encouraged struggling steelmakers to maximise output, with many able to squeeze out profits for the first time in months. Traders expect output to continue rising in May after a number of previously shuttered mills went back into operation.
The April volume is slightly lower than the record 70.65 million tonnes of crude steel produced in March.
Output over the first four months of the year has now hit 261.42 million tonnes, down 2.3 percent on the same period of last year, according to the National Bureau of Statistics.
Though production has risen for two months in a row, analysts have warned that the improvement over March and April is likely to be temporary, with underlying demand in the world’s biggest steelmaking nation still relatively weak.
The China Iron and Steel Association’s composite index, which tracks the price movements of six major Chinese steel products, rose from 69.81 to 84.66 over April, and has risen more than 50 percent since the beginning of the year.
CISA’s index is measured against a 1994 reference price, meaning that prices are still more than 15 percent lower than they were 22 years ago.
The association warned that mills were still caught in a “vicious circle” in which they ramp up production at the first sign of improving prices, thereby driving prices back down again, and the association’s index has retreated to 82.57 during the first week of May.
(Reporting by David Stanway; Editing by Stephen Coates)
