Steel production in China will be reduced from summer records

China's steel industry weakened in August, reaching a record high in July, under tight production restrictions in major metallurgical regions as part of efforts to clear the country's sky from smog.

The world's largest steel producer smelted 80.33 million tonnes of steel, according to the National Bureau of Statistics on Friday. This is 1.1% lower from a record 81.24 million tons in July, but still 7.7% higher from 74.59 million tons in the same month last year.

Tangshan City, China's No. 1 steel hub, has pointed out steel mills to a 30-50% drop in productivity in the six weeks from July 20 to August 31.

Blast furnace use at steel mills in China dropped to 66.16 percent in mid-August, according to data compiled by consulting company Mysteel.

“Steel production may pick up slightly from September as some mills have resumed after summer maintenance, but there will be limited room for production growth,” said Zhao Yu, steelmaker at Huatai Futures.

Steel mills continue to benefit from strong margins as Chinese traders have stocks of around 10 million tonnes of metal products, indicating strong demand and encouraging factories to increase production.

“This winter there has been talk of tougher environmental measures on the market. So construction sites are frantically buying more steel products ... before winter curbs start in November, ”Zhao said.

According to statistics, in the first eight months of the year, steel production in China increased by 5.8% to 617.4 million tons.