China's steel output softens in September after record high in August as credit tightens

Steel production hit a record 94.85 million mt in August, up 1.6% month on month and 8.4% higher year on year, National Bureau of Statistics data released Sept. 15 showed. Over January-August, output was up 3.7% on year at 688.89 million mt.

China's pig iron output edged up 0.5% on month and rose 5% on year to 78.55 million mt in August, taking total output over January-August to 589.4 million mt, up 3.4% on year.

However, crude steel production in the first 10 days of September averaged 2.96 million mt/day, down 0.6% from Aug. 20-31 but up 6.4% on the year, according to China Iron & Steel Association, or CISA, data.

CISA members accounted for 2.14 million mt/day of the Sept. 1-10 total, 6.7% higher than a year ago, and marking the 14th consecutive 10-day period of year-on-year increase.

The softening in early September from the month before was in line with market expectations, as many participants expect production peaked for the year in August and will edge lower for the rest of 2020.

This is because upward momentum in property and infrastructure, which account for over 55% of China's total steel consumption, has slowed as a result of tightened monetary growth and more conservative fiscal stimulus.