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China’s Steel Sector Sees Production Dip in Q1 but Prices Show Recovery Signs in April

In the first quarter of the current year, China’s steel industry witnessed a decline in production, with crude steel output decreasing by 1.9%, according to the latest data released by China’s National Bureau of Statistics (NBS). Despite the downturn, there are early indicators of a positive turnaround in steel prices as of April.

The detailed figures provided by the NBS reveal a mixed picture for the industry’s output. During the January to March period, the production totals for pig iron, crude steel, and finished steel stood at 213.39 million metric tons (mt), 256.55 million mt, and 336.03 million mt, respectively. These numbers translate to a year-on-year decrease of 2.9% for pig iron and 1.9% for crude steel, whereas finished steel output experienced a 4.4% increase.

The month of March particularly highlighted the sector’s challenges. Outputs of pig iron and crude steel fell sharply by 6.9% and 7.8% respectively, against the previous year. Contrarily, finished steel saw a marginal gain of 0.1%.

Analysts suggest that these declines are attributable to weaker demand from downstream industries, coupled with a preceding downtrend in steel prices. Typically, March marks a peak season for steel production, but the expected revival in demand did not materialize, casting a shadow over the early months of the second quarter.

However, a glimpse of recovery is on the horizon. In the first ten days of April, the average daily output among China’s large and medium-sized steel companies, all members of the China Iron and Steel Association (CISA), dipped slightly by 0.47% compared to the latter part of March. This contraction in production has inadvertently supported the steel market, contributing to a nascent rebound in steel prices as April progresses.

As the steel market navigates through these complex dynamics, industry players are cautiously optimistic. The dip in output is seen as a necessary adjustment to balance the market, which may foster a healthier pricing environment moving forward.

Moving into the second quarter, the steel industry’s focus will likely remain on aligning supply with actual demand and monitoring price movements for signs of sustained recovery. The global economic landscape and China’s domestic infrastructure investments will continue to play significant roles in shaping the steel market’s trajectory.

Investors and industry stakeholders will be keeping a close watch on how these trends unfold, anticipating the potential for a more stable and balanced market as the year progresses.

By: Coal Newswire, AI generated