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China Churned Out a Record 3 Million Tons of Steel a Day in June

Bloomberg logoBloomberg 7/16/2020 Bloomberg News
a group of people standing next to a fence: Workers carry a steel bar at the construction site of an elevated highway on the outskirts of Shanghai, China, on Friday, June 12, 2020. China's economy continued to recover in May, with accelerating industrial output growth leading the way while consumption remains in contraction. © Bloomberg Workers carry a steel bar at the construction site of an elevated highway on the outskirts of Shanghai, China, on Friday, June 12, 2020. China's economy continued to recover in May, with accelerating industrial output growth leading the way while consumption remains in contraction.

(Bloomberg) -- China’s steelmakers pushed daily output to a record in June, putting the world’s top producer on track for a billion tons of output this year amid booming demand from construction and infrastructure.

Crude-steel production in June reached a daily average of more 3 million tons for the first time, according to China’s statistics bureau. Output for all of June was 91.58 million tons, up 4.5% year-on-year, putting six-month production at 499 million tons.

Key Insights

Steelmakers are benefiting from a busier-than-usual construction season, and the prospect of a wave of new infrastructure projects as China’s government tries to cushion the blow of the pandemic crisis. China’s economy grew 3.2% in the second quarter, beating analyst estimates, with busier industrial activity contributing to the recovery.Output this year will pass 1 billion tons this year even if volumes fall 0.6% in this second half of this year, according to Bloomberg calculations. Banks including JPMorgan Chase & Co. and Morgan Stanley are forecasting production at more than a billion tons this year and next.China’s strong steel production fueled iron ore’s surge to the highest in almost a year this week, just short of $110 a ton. China imported its second-biggest monthly volume of the steel ingredient in June, even amid supply disruptions.China’s steel output typically peaks in May or June prior to a summer lull.

Market Reaction

Rebar futures were down 0.2% at 3,739 yuan a ton in Shanghai as of 10:25 a.m. local time. Iron ore futures fell 0.3% to 834.5 yuan a ton in Dalian, falling for a second day from their highest in nearly a year.

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China’s aluminum output in June rose 0.8% from a year earlier to 3.02 million tons, also lifting daily output to above 100,000 tons for the first time. Year-to-date production increased 1.7% to 17.89 million tons.

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