Chinese steelmakers eased production in June, but output was still up by a marginal 0.2% from the same month last year. National Statistics Bureau data showed production dipped to 91.61 million metric tonnes of crude steel last month, compared to 92.86 million tonnes in May.
Analysts attributed the decline to easing demand due to heatwaves and heavy rains curbing construction activities. However, the primary factor behind the weakness was a rare fall in monthly steel exports. Steel exports decreased by more than 9% from May to 8.75 million tonnes in June, enough to reduce total production from May’s level.
Despite the decrease, June’s exports were still 16% higher than a year ago, bringing the total for the first half of the year to 53.2 million tonnes. This 24% increase over the first half of last year underscores that the steel industry, and consequently demand for iron ore, relies heavily on exports.
Trade data for June and the first six months revealed that iron ore imports decreased by 4.3% in June from May to 97.61 million tonnes. However, the total for January to June rose substantially by 6.2% to 611.18 million tonnes. This, coupled with persistently weak demand, explains why portside inventories of imported iron ore at China’s 45 major ports remain at multi-year highs.
Mysteel’s weekly survey indicated that inventories stood steady at 149.9 million tonnes compared to a year ago, as of the end of last week, representing an 18% increase from the same time in 2023.
Despite the mixed results, the modest June steel production figures prompted iron ore prices in Asia to edge slightly higher to around $US109 a tonne on the SGX trading platform in Singapore on Monday.