China’s daily steel production in June climbed from the previous month, weighing on prices as a slowing economic expansion reduced demand.
Output was 2 million metric tons a day last month, compared with 1.98 million tons in May and a record 2.02 million tons in April, based on monthly data collated by the National Bureau of Statistics. Crude-steel production was 60.2 million tons in June, the bureau said today, and 61.23 million tons in May.
Asia’s largest economy expanded 7.6 percent in the second quarter, the slowest pace in three years, draining demand for the alloy used by builders and automakers and prompting price cuts by Baosteel Iron & Steel Co., China’s biggest publicly traded mill, Angang Steel Co. and other producers. Chinese mills may cut output this month and next as they struggle to break even, said Custeel.com’s chief analyst, Hu Yanping.
“The rebound in daily output is certainly bad news,” Hu said today by telephone from Beijing. “It will drag down the already weak prices, further squeezing steelmakers’ profits.”
The average price of hot-rolled coil, a benchmark product, has fallen for 13 straight weeks, the longest streak since January 2003, according to data from Beijing Antaike Information Development Co. It lost 9.6 percent to 3,974 yuan a ton from 4,395 yuan on April 13. Prices of iron ore, a steelmaking ingredient, fell about 10 percent in this period.
Hebei Iron & Steel Co., the listed unit of China’s biggest mill by output, said profit in the first half this year may drop as much as 90 percent from a year earlier to 98.8 million yuan ($15.5 million), according to an exchange filing yesterday. Angang Steel, the largest Hong Kong-traded Chinese mill, said it expects to swing to a loss in the first half after prices plunged.
Baoshan Steel, supplier of half of China’s auto sheets, will cut its benchmark product prices for a second month, reducing rates by 200 yuan to 260 yuan a ton for August delivery, the Shanghai-based company said yesterday.
— With assistance by Helen Yuan