China Steel Output falls down to Worst which is first decline over period in 20 years

15 April 2015

China’s crude steel output fell in the first three months of the year, the first decline over that period in 20 years, as the country grew at the slowest pace since the global recession.

Crude steel production from January to March slid 1.7 percent from a year earlier to 200.1 million metric tons, according to National Bureau of Statistics data released Wednesday in Beijing. First quarter output hasn’t contracted since 1995.

Falling production in the world’s largest steelmaker reflects the country’s slowing pace of construction and sliding exports. Output is poised to fall further as the government tries to trim overcapacity and cut pollution in its drive to shift the world’s second-biggest economy toward consumption and services.

“Given that China has been closing down some of the steel mills, the drop is less than we expected,” said Helen Lau, a metals and mining analyst at Argonaut Securities Ltd. in Hong Kong. “The less profitable and higher polluting ones are shutting, but the larger ones are taking their market share.”

The country’s gross domestic product in the three months through March rose 7 percent from a year earlier, the weakest pace since 2009, the statistics bureau said. That matches the median forecast in a Bloomberg survey, as well as the leadership’s full-year target.

Construction Slump

New property construction starts slid 18 percent in the first quarter, according statistics bureau data on Wednesday. Output of pig iron, used to make steel, contracted 2.3 percent over the same period. Cement production last month plunged 21 percent, the most in records going back to 1995.

China’s apparent steel demand declined about 5 percent in the past six months from a year earlier, the biggest drop since the global financial crisis, Goldman Sachs Group Inc. said in a report on April 6.

Iron ore demand in China, the world’s largest buyer of the steel-making raw material, is expected to remain weak as steel demand contracts, the China Iron & Steel Association said earlier this month.

Steel product exports in March fell a second month to 7.7 million tons, a nine-month low, according to customs data released Monday. Reinforcement-bar, used in construction, fell 0.4 percent at 2,314 yuan ($373) a ton on the Shanghai Futures Exchange at 1:43 p.m. in Hong Kong. Prices are down 11 percent this year, following a 27 percent collapse in 2014.