China’s crude steel output is expected to reach 742Mt this year, up 4.7% from last year, with the growth rate increasing 1.1% over the rate in 2012.

Apparent consumption of crude steel is projected to increase 6.1% y-o-y to 718Mt, up 6.1%. Accordingly, China will continue to see a steel glut in 2013.

This is the assessment of Yang Jianlong, deputy director of the Industrial Economics Research Department under the Development Research Center of the State Council.

Output of crude steel in the first three months of 2012, was 192Mt, a startling growth of 10.34% compared with the same period 2012, according to the latest data released by the National Bureau of Statistics (NBS). Output in March alone increased by 9.2% from a year earlier to 66.3Mt.

China’s crude steel output usually witnesses a few months of high yield, with daily output of crude steel in the first quarter averaging 2.13Mt, 130kt a day higher than that in last year’s high-yielding period.

The growth in steel output had, up to a few years ago, closely tracked that of GDP, but it slowed last year. While the country’s GDP grew by 8.1% in 2012, crude steel output in the same period only increased by 3.1%, but in the first quarter of this year a reversal occurred with crude steel output soared by 10.34% while GDP growth slowed to 7.5%.

This rapid increase in output is not supported by consumption, resulting in stock piling which has been rising sharply since the beginning of this year.

Steel stocks reached a peak in the middle of March and it did not start to decline until daily output waned.
China’s fixed asset investment and investment in property in March saw slow growth, which also badly hit steel demand.

Source: China Metals e-mail