Steel demand in China has fallen sharply compared to November

Compared to previous months, China's steel production and low export volumes continue to underline strong fundamental requirements in the world's largest steel market, Commerzbank said.

Chinese steel output, which is mainly provided by blast furnaces, increased earlier this year, as recorded by the National Bureau of Statistics. A slowdown is expected as seasonal cuts in raw material throughput increased in northeast China last month.

Against this backdrop, a German bank announced a fall in Chinese steel production by 8.6% on a monthly basis to 66.15 million tons last month. “Despite low production in November, China again exported slightly more steel products,” analysts at Commerzbank said in a comment.

The increase in steel production earlier this year came after the end of illegal steel production, mainly using scrap metal, which was not recorded in official statistics, and as domestic demand for steel, especially construction grades, increased.

According to the German bank, the growth in steel exports by 7.4% per month to 5.4 million tons still leaves supplies at a low level. Export rates since January are one third less than on an annualized basis. Chinese steel exports fell in October to their lowest level since February 2014. “The very low level of exports is primarily due to high domestic demand and prices,” said Commerzbank.

"The decline in steel production in November has not yet resulted in a decline in iron ore imports, which has confirmed the cost of iron ore." On Friday, iron ore prices rose 62% Fe to $ 71.45 /t CFR in China, although they averaged $ 64.28 /t in November.