China produced 4.1% more crude steel in May compared to the month before as disruptions from COVID-19 lockdowns around the country gradually eased and mills eyed a recovery in demand.
The world’s biggest steel producer made 96.61 million tonnes of the metal last month, data from the National Bureau of Statistics (NBS) showed on Wednesday, compared with 92.78 million tonnes in April.
Average daily output in May was 3.12 million tonnes, according to a Reuters analysis of the NBS data. That compared with 3.09 million tonnes of daily production in April, and was the highest level since June 2021.
The rising output came as a raw material supply crunch due to transport restrictions eased with the lifting of lockdowns and mills stepped up utilisation rates in the hope of a swift recovery in demand.
China’s strict “dynamic zero-COVID” policy has crippled factory activity, and steel mill profits are being squeezed by weak demand and high raw material prices.
China’s factory-gate inflation cooled to its slowest pace in 14 months in May, depressed by weak demand for steel, aluminium and other key industrial commodities due to tight COVID-19 curbs.
But Beijing has launched a package of measures aimed at reviving its pandemic-ravaged economy.
“Chinese operators are keeping their blast furnaces “hot” by utilising lower grade ores to voluntarily reduce yields in the hope that they can ramp up swiftly and respond to recovering steel demand as and when (theoretically) temporary lockdowns are lifted,” said Atilla Widnell, managing director of Navigate Commodities in Singapore.
China has, however, pledged to cut its steel output this year to protect the environment, vowing an annual decline.
In the first five months, China made 435.02 million tonnes of the metal, down 8.7% from the same period a year ago, the statistics bureau said.
