China's Steel Production Strong in April

May 20, 2011
Steel producers ramp up output as they await power-reduction mandates to take effect.

World crude steel production rose 5% in April from the previous year to 127 million metric tons, the World Steel Association said May 20.

China, the world's largest steel-producing country, reported production gains of 7.1%. China's daily production rate hit a record of 1.968 million tons per day in April, steel analyst Michelle Applebaum of Steel Market Intelligence reported in her newsletter.

The rise in Chinese production was likely the result of steelmakers responding to higher steel prices by ramping up output.

Power restrictions in China may have also impacted output as steel producers sought to operate at full tilt before reducing output in coming months, Applebaum said.

China appears to be headed for another record month in May after the China Iron & Steel Association estimated that average daily production in the first 10 days of the month rose 0.3% versus the last 10 days in April, Applebaum noted.

The United States produced 7.1 million metric tons of crude steel in April, 2.1% higher than the previous year, the World Steel Association reported.

U.S. production continued to fall in April, posting a 0.3% daily production drop, Applebaum said. The drop was likely due in part to storms in the Southeast, which hurt production levels in that region.

Japan posted a 6.3% production drop in April, likely due to the production disruption caused by the recent earthquake and tsunami, the World Steel Association reported.

Applebaum projects global steel production will rise modestly in May as Japanese steelmakers continue to ramp up production to more normal levels. At the same time, output in regions such as China and the United States will likely remain relatively stable.

" In China, we suspect that May production is likely to be flattish as mills running full-out in anticipation of power restrictions in some provinces will probably be offset by actual production cuts due to power restrictions already taking place in others," Applebaum wrote. "In the U.S., production declines resulting from power disruptions in the South are likely to be offset by the restart of Sparrows Point, so that May output will remain near April levels."

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