Chinese Steel Industry Sees A Steady Growth In Steel Production

China’s steel mills have been exhibiting steady growth for the last ten weeks straight, marking a positive indication that the industry is on the road to recovery. According to market reports, as of 16 March 2023, China’s 247 steel mills were running at an 88.33% capacity, a five-month high since October 2022, due to the trend of increasing pig iron smelting in the nation’s blast furnaces.

Factors Enabling the Chinese Steel Industry’s Progress

Let’s have a look at the factors pushing forward the Chinese steel industry’s progress:

• Rising Pig Iron Smelting In Blast Furnaces– For ten consecutive weeks, the trend of rising pig iron smelting in the nation’s blast furnaces has been observed. This growth in blast furnace utilization can be attributed to the production increase or restart of several plants in China’s south and east. The amount of blast furnace uses in China increased by 0.41 percentage points from the previous week, reaching 2.38 million tons/day of pig iron production, which is the highest since October 2022.
• Production Increase And Use Of Imported Iron Ore– Despite the modest downturn in the market, domestic steel mills have continued high levels production to profit from steel sales. The daily use of imported iron ore increased to 2.89 million tons/day from 10 March 2023-16  March 2023, a 13.5 thousand tons/day increase, due to the growth in steel manufacturing. Total imported iron ore stocks fell by 543 thousand tons, but the overall amount of tonnage would be sufficient for nearly 32 days of use.
• Increased Steel Production And Demand Anticipation– China’s steel producers increased their output of steel in January 2023-February 2023 by 5.6% compared to January 2022-February 2022, reaching 168.7 million tons. In February 2023 alone, production increased by around 1%, totaling approximately 89 million tons. As the construction season peaks in March 2023, Chinese steel producers anticipate an increase in product demand, thereby increasing steel production.

Insight

Despite the decrease in steel production in 2022 due to the slowdown of the Chinese economy and the decline in the real estate market, China’s steel mills exhibit steady growth in 2023. The steady growth in blast furnace utilization, daily use of imported iron ore, and steel production output are positive signals of the industry’s recovery. With the anticipation of a rise in product demand in March 2023, China’s steel industry is on the path to recovery.

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