China Just Made the Most Steel Ever as Trump Gets Set to ActBloomberg News
Production of steel, aluminum jumps in first half, bureau says
Gains come as Trump administration weighs steps to cut imports
China’s old economy is displaying greatly renewed vigor. Output of steel and aluminum hit records last month, with mills and smelters boosting run-rates of the products used to make buildings, cars and appliances just as the Trump administration in the U.S. weighs steps to roll back imports.
Output of crude steel was 73.23 million metric tons in June, 5.7 percent more than a year earlier, and up 4.6 percent to 419.75 million tons in the first half, the statistics bureau said on Monday. Supply of aluminum rose 7.4 percent to 2.93 million tons last month, and gained 8.8 percent to 16.84 million tons over the six months. China is the world’s biggest maker of both.
The unprecedented performance from the country’s metals’ industry comes as China’s gross domestic product topped estimates in the second quarter. The nation’s steel mills are in a sweet spot, with larger suppliers ramping up output after a crackdown on the informal sector triggered a shortage of some products, aiding prices. Aluminum has also gained this year, with China’s policy makers seeking to cut outdated capacity even as more plants are added.
“Steel mills are running at very high rates and we can see electric furnaces are ramping up production amid good margins,” Yu Chen, an analyst with Mysteel Research, said from Shanghai. “Demand has also beaten expectations. We see property sales, infrastructure, auto sales all pretty good in June.”
Steel prices have been on a roll in China. Reinforcement-bar futures have surged 27 percent on the Shanghai Futures Exchange this year, and ended on Monday near the highest close since 2013, while coil futures have jumped 12 percent since the end of 2016. In London, three-month aluminum, a global benchmark, has gained 14 percent and last traded at $1,935.50 a ton.
Improved prices have aided producers. Aluminum Corp. of China, the state-owned aluminum producer known as Chinalco -- will post first-half profit of 1.12 billion yuan ($165 million), the best in nine years, the 21st Century Business Herald said, citing the company’s mid-year meeting. Last week, Angang Steel Co. and Hesteel Co. said they expected a jump in net income.
‘I’m Stopping It’
President Donald Trump’s administration has decisions pending on both steel and aluminum, blaming China for overproducing and creating global gluts. Earlier this month, Trump told reporters that China, as well as other countries, are “dumping steel and destroying our steel industry, they’ve been doing it for decades, and I’m stopping it. It’ll stop.”
That stance comes even as trade data shows divergent trends for shipments of the two metals. While China’s overseas sales of steel contracted 28 percent to 41 million tons over the first six months, exports of aluminum increased 5.9 percent to 2.41 million tons.
The increase in steel production, which has helped to support iron ore in recent weeks, runs counter to widespread expectations that output would at best level off in 2017. Earlier this month, Australia forecast Chinese steel supply of 805 million tons in 2017, down from 808 million last year.
Iron ore futures rallied in Asia on Monday after the steel production data, with the SGX AsiaClear contract in Singapore rising as much as 3 percent to $66.16 a ton. The benchmark spot price for 62 percent content ore extended last week’s 4.7 percent advance, gaining 1.6 percent to $66.81 a dry ton on Monday, according to Metal Bulletin Ltd.
— With assistance by Winnie Zhu, Martin Ritchie, and Ranjeetha Pakiam