China April steel output climbs to monthly record; aluminium output up 3.9% as smelters restart

[BEIJING] China's crude steel production rose 12.7 per cent in April from March to its highest monthly level on record, official data showed on Wednesday, bolstered by firm demand and good profitability in steelmaking.

The world's top steelmaker churned out 85.03 million tonnes of crude steel last month, up from 80.33 million tonnes in March and 76.7 million tonnes at the same time last year, data from the National Bureau of Statistics (NBS) showed on Wednesday.

Average daily output of the metal reached 2.83 million tonnes, according to Reuters calculations based on the official data.

For the first four months of the year, China produced a total of 314.96 million tonnes of steel, up 10.1 per cent on the same period in 2018, the NBS data showed.

"Profitability at steel mills remains at a fairly good level, although high raw material prices have crimped margins (to some extent)," Zhuo Guiqiu, an analyst at Jinrui Futures, said, speaking before the data was issued.

The most-active iron ore contract on the Dalian Commodity Exchange topped out at 720 yuan (S$143.34) a tonne on April 9, buoyed by concerns over tight supply. It has since been hovering above 600 yuan.

Anti-pollution curbs on factories also will continue to exert some influence on future production levels.

The top steelmaking city of Tangshan tightened its anti-pollution restrictions throughout May, ordering mills to halt operations of blast furnaces and converters. Still, the utilisation rate at steel mills in Tangshan picked up by 3.26 percentage points last week, rising to 74.53 per cent despite the curbs.

China last week said it would impose further strict environmental standards in key pollution-control areas, including the Beijing-Tianjin-Hebei region and the Yangtze River Delta.

HIGHER ALUMNINIUM OUTPUT

As for aluminium, China's output rose from the previous month to its third-highest daily rate on record in April, according to Reuters calculations based on official data, as smelters ramped up production to cash in on higher prices.

The world's top aluminium-producing country churned out 2.92 million tonnes of the metal last month, the National Bureau of Statistics said on Wednesday.

That was up 1.4 per cent from 2.88 million tonnes in March, which saw the end of winter restrictions on output aimed at curbing pollution, and was up 3.9 per cent year-on-year, the bureau said.

In the first four months of the year, China produced 11.48 million tonnes of aluminium, a rise of 4.1 per cent from the same period last year, the data showed.

Shanghai aluminium prices rose by 3.3 per cent in April, their best month in a year, moving above the 14,000 yuan a tonne mark that is considered a break-even threshold for many Chinese smelters.

Analysts say the rally has seen smelters restart capacity they previously shut as prices slumped in the second half of 2018, although it can take several months to ramp up to full production.

On a daily basis, output averaged around 97,300 tonnes last month, according to Reuters calculations, up from around 92,900 in March. It was the highest daily rate since December's record 98,400 tonnes a day and the third-highest on record.

Meanwhile, output of 10 nonferrous metals - including copper, aluminium, lead, zinc and nickel - came in at 4.74 million tonnes in April, the bureau said. That was up 1.5 per cent from 4.67 million tonnes in March and up 4.9 per cent year-on-year.

Year-to-date nonferrous output was up 5.2 per cent at 18.64 million tonnes. The other metals in the group are tin, antimony, mercury, magnesium and titanium.

REUTERS