China has reached a new record in steel production

China‘s steel industry hit a new record in steel production in the first quarter, supported by consumption in the infrastructure sector.

China produced 231 million tons between January and March, up nearly 10 percent from a year earlier. Reaching the highest record for the first quarter. Production in March rose by 10% to 80.3 million tons. According to data provided by the Bureau of Statistics.

China’s economy grew by 6.4% in the first quarter. Exceeding estimates and fueling the debate on the need for additional stimulus measures. The demand environment for metals is improving, Citigroup Inc. said earlier this week.

„Increased investment in railways, underground and urban sewerage systems will be the main drivers of steel demand, slightly better this year.” Bloomberg Intelligence analyst Andrew Cosgrove reported.

With the new record in steel production, prices have also risen rapidly

The aggressive activity of China’s steel mills coincides with serious disruptions in iron ore supply. Which have led to a galloping increase in prices by more than 30% this year. While Vale SA said that one of the most important mines will be reopened imminently. The iron miner did not change its low sales trend for 2019. Rivals BHP Group and Rio Tinto Group have also cut annual output due to operational problems and adverse weather conditions.

China’s steel production is expected to grow by 1.8 percent this year. And rising prices will expand in the third quarter due to better demand. According to Shanghai Steelhome Information Technology. In 2019, the government is likely to increase the level of stimulus, which will increase demand for steel. But in 2020, however, a minor drop in Chinese steel demand is expected, as the stimulus effects are expected to subside.

Also, steel demand in Asia, excluding China, is expected to grow by 6.5% in 2019 and 6.4% respectively in 2020, making it the fastest growing region in the global steel industry.

Article source: https://www.bloomberg.com/news/articles/2019-04-17/china-s-steel-machine-revs-up-to-record-to-feed-infrastructure