China's 2014 steel output grows at slowest rate since 1981

[SHANGHAI] China's steel production grew at it slowest rate in more than two decades in 2014 as a cooling economy in the world's largest producer curbed demand and the government moved to tackle overcapacity and pollution.

The low growth rate suggests China's authorities have had some success in efforts to lower production and close polluting plants, but analysts warned of possible upward revisions to the 2014 data, and still forecast a small rise in output in 2015. "We still expect a marginal growth in steel production this year as Beijing has sped up approvals of infrastructure construction projects," said Sara Wang, an analyst with Masterlink Securities in Shanghai.

Output reached a record 822.7 million tonnes - about half of forecast global production - but was up just 0.9 per cent on the previous year, the slowest growth rate since 1981, data from the National Bureau of Statistics (NBS) showed on Tuesday.

The world's second-largest economy grew 7.4 per cent in the whole of 2014, undershooting the government's 7.5 per cent target and marking the weakest expansion in 24 years.

Steel production has doubled in just eight years, with China driving its economy through the expansion of heavy industry, but this has led to severe overcapacity and hazardous pollution problems, particularly in northern regions.

In a move to improve air quality, Beijing has taken the toughest measures ever to order steel mills to curb production, while sharp falls in steel prices and high inventories have also forced some steel mills to rein in production.

The NBS originally reported 779 million tonnes of production for 2013, but the 2014 growth figures imply an upward revision to the 2013 data of nearly 5 percent to 815.4 million tonnes, and that monthly output figures from January to November 2014 have also been revised up by more than 1 percent, according to Reuters calculations.

Analysts cautioned that a similar revision could eventually be made to the 2014 figures.

Steel output in December jumped 7.6 per cent to 68.09 million tonnes in December, the highest since August, and up 1.5 per cent from a year ago, the NBS data showed.

However, daily rates stood at 2.196 million tonnes for the month, compared to an annual average of 2.254 million tonnes.

Steel output in China could be approaching its peak, the China Iron & Steel Association (CISA) said last week, and it urged producers to continue slashing excess capacity and improving efficiency.

Benchmark steel rebar futures on the Shanghai Futures Exchange tumbled 29 per cent last year.

REUTERS