China Raw Steel Output to Hit Record in 1H 2012

Chinese raw steel output will hit half year record in January-June when the output is expected to increase by around 2% to around 356 million tonnes in the period from same period of 2011. China Iron and Steel Association (CISA) reported the output was daily 1.999 million tonnes in early June, which is monthly 60 million tonnes pace. The makers try to increase the output to minimize the operating cost and maximizing the market share. The makers expect higher demand would cancel the oversupply despite of high inventory level.

The raw steel output increased by 2.2% to 296.26 million tonnes in January-May from same period of 2011. The daily output in May decreased by 2.2% to 1.975 million tonnes from April due to facility check working. The output increases in June from May.

The major makers including Baoshan Iron & Steel and Wuhan Iron and Steel reduced the selling price for July impacting on the market price. Iron ore market price rebounds and ferrous scrap market shows sign to hit bottom. The steel market price could be supported by the higher raw materials cost and higher demand under stimulus package.

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