China’s steel, aluminum output at record in June

Source:Reuters-Global Times Published: 2017/7/17 17:48:39

Latest numbers not a provocative move ahead of US import tariff decision

China churned out record amounts of steel and aluminum in June as producers rushed to cash in on rallying prices in the wake of a drive by the country to crack down on output of low-grade metal.

This could fuel concerns the world's top steel producer will export more metal and fan tensions with the US after it accused the nation of flooding international markets with cheap aluminum and steel.

China has long denied that it has been offloading metals abroad at the expense of foreign producers.

Chinese steel output in June rose 5.7 percent from the year before to a record 73.23 million tons, surpassing April's all-time high of 72.78 million tons, data from the National Statistics Bureau showed on Monday.

Aluminum production jumped 7.4 percent year-on-year to 2.93 million tons, exceeding December's record of 2.89 million tons.

Export data showed steel products shipments fell last month, while aluminum sales abroad were steady.

But analysts said the latest numbers should not be seen as a provocative move ahead of a decision by the US on possible import tariffs.

"It's wrong to think that this is some sort of unified, homogenous voice that is deliberately making some provocative statement to the US," said Paul Adkins, managing director of aluminum consultancy AZ China.

"That couldn't be further from the truth. What we're really seeing, if anything, is ... a lack of a coordinated response [from Chinese producers]."

Analysts said the increases came as local steel and aluminum prices rose after the government cut back on metals producing capacity earlier in the year as it battles a glut in supply and looks to clamp down on pollution.

"The reason that prices were higher in the first place was the expectation of Chinese cutting back supply of aluminum and steel, yet that is what is inducing its high utilization rates," said Mark Pervan, chief economist at AME Group in Sydney.

Steel rebar margins were almost 1,000 yuan ($147.77) per ton in June, enticing mills to increase output, said Bai Jing, analyst at Galaxy Futures.

"China's crackdown on low-end steel has left a capacity gap in the market," she said.

In the first half, China eliminated around 120 million tons of low-end steel capacity.

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