The steel production in China surged 20.7% year-on-year to 56.14 Million Metric Ton in May 2010 on account of high demand.
As per the latest data released by China's National Bureau of Statistics, the steel production in China rose 20.7% year-on-year to 56.14 Million Metric Ton during May 2010. The country’s average steel output per day stood at 1.811 Million Metric Ton.
Pig iron production in the month of May 2010 surged 14.3% to 52.26 Million Metric Ton, while the finished steel production escalated 23.6% to 71.22 Million Metric Ton against the same period last year (2009).
The crude steel output in the first five months of 2010 recorded year-on-year growth of 23.8% to 268.9 Million Metric Ton and the pig iron production increased by 20.6% to 253.9 Million Metric Ton. The production of finished steel in the same period surged 27.5% to 326.29 Million Metric Ton.
The main reason for high steel production in China is strong demand from downstream industries that have been cushioned by the government stimulus package from slowdown. The prices of steel have flared up due to strong demand and encouraged mill owners to raise their production levels in order to gain maximum profit.
Besides, the Chinese mills have raised their production levels in view of recovery in foreign markets. This is evident from the fact that net exports of steel products during April 2010 recorded the highest increase since October 2008.
However, the mills are expected to revise their production plans later this year due to the soaring inventories and possible drop in demand owing to new policies for the Chinese property sector.
In the long run, the steel demand in China is expected to remain robust that will result into the high steel production in coming years. According to a research report “China Steel Industry Forecast till 2012
” by RNCOS
, the crude steel production in China is expected to grow at a CAGR of over 5% from 2010 to 2012.
As per an analyst at RNCOS
, “Although the steel industry has recorded growth, the steel producers are still concerned about the soaring iron ore prices. Nevertheless, the government is scrutinizing the proposals of tax deductions for domestic iron ore producers to reduce their costs. If there is a cut down in taxes, the steel production will rise further.”
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