China Churned Out a Record 3 Million Tons of Steel a Day in June

(Bloomberg) -- China’s steelmakers pushed daily output to a record in June, putting the world’s top producer on track for a billion tons of output this year amid booming demand from construction and infrastructure.

• Crude-steel production in June reached a daily average of more 3 million tons for the first time, according to China’s statistics bureau. Output for all of June was 91.58 million tons, up 4.5% year-on-year, putting six-month production at 499 million tons.

Key Insights

• Steelmakers are benefiting from a busier-than-usual construction season, and the prospect of a wave of new infrastructure projects as China’s government tries to cushion the blow of the pandemic crisis. China’s economy grew 3.2% in the second quarter, beating analyst estimates, with busier industrial activity contributing to the recovery.
• Output this year will pass 1 billion tons this year even if volumes fall 0.6% in this second half of this year, according to Bloomberg calculations. Banks including JPMorgan Chase & Co. and Morgan Stanley are forecasting production at more than a billion tons this year and next.
• China’s strong steel production fueled iron ore’s surge to the highest in almost a year this week, just short of $110 a ton. China imported its second-biggest monthly volume of the steel ingredient in June, even amid supply disruptions.
• China’s steel output typically peaks in May or June prior to a summer lull.

Market Reaction

• Rebar futures were down 0.2% at 3,739 yuan a ton in Shanghai as of 10:25 a.m. local time. Iron ore futures fell 0.3% to 834.5 yuan a ton in Dalian, falling for a second day from their highest in nearly a year.

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• China’s aluminum output in June rose 0.8% from a year earlier to 3.02 million tons, also lifting daily output to above 100,000 tons for the first time. Year-to-date production increased 1.7% to 17.89 million tons.

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With assistance from Bloomberg