China’s crude steel production rises in teeth of trade tensions

June 13: China’s crude steel output climbed in May as the world’s biggest producer continues to churn out supply in defiance of complaints that it’s swamping the global market.

Output rose to 70.5 million tonne (mt), up 1.8% from a year earlier and 1.6% higher than April, the National Bureau of Statistics said Monday. The figure is just below March’s record 70.65 mt and brings the total for the first five months to 330 mt, down 1.4% on year. China accounts for about half of global supply for the metal used in everything from cars to skyscrapers.

Steel prices in China flipped from bull to bear market in May following a 29% slump in the Shanghai benchmark for reinforcement bar from its April high. The collapse came afterregulatorsandexchanges stepped in to cool excessive speculation and supply expanded as mills fired up capacity to capture thicker margins.

“Many mills have brought back idled capacity or simply expanded existing production to take advantage of good profits in previous months,” said XuXiangchun,chief analystat Mysteel Research in Beijing. Those steelmakers aren’t able to immediately dial back production, according to Lv Xiaohua, analyst at BOCI Futures Co, and “output will remain at elevatedlevelsforsometimeas long as mills have positive cash flow,” she said. China’s fading infrastructure boom has left it saddled with too much capacity after decades of rapid growth. While production last year shrank for the first time since 1981 as demand contracted, supply still far outstrips domestic needs. The nation is exporting its surplus at record rates, drawing the ire of international rivals.

CompetitorsfromIndiatothe European Union have raised trade barriers and in recent weeks China’s industrial overcapacity has been singled out as aglobalproblem. Bloomberg