Steel production in China hits 9-month low in December 2018

The latest production statistics released by China's National Bureau of Statistics (NBS) indicate a significant drop in the country's steel production during the last month of the previous year.

Production of crude steel in December 1818 amounted to 76.12 million tons, which is almost 2% less than in the previous month. In addition, this is the lowest monthly production volume since March this year. China's average daily steel production fell nearly 5% from the previous month to 2.46 million tonnes, the lowest level since March 18.

The huge drop in production is mainly due to the slowdown in economic growth in the country. GDP growth of 6.4% in the fourth quarter of 2018 was the slowest in nearly a decade. In addition, annual GDP growth of 6.6% was the lowest since 1990. In 2018, steel inventories remained weak in winter. The steel mill's profit has also fallen more than 60% since November.

The country's total crude steel production in 2018 was 928.26 million tonnes, up 6.6% from 2017. Total finished steel production increased 8.5% to 1.1 billion tonnes in 2018. In addition, pig iron production rose 3% to 771.05 million tonnes. during a year.

It is estimated that China's steel production is likely to fall to 900 million tonnes in 2019 due to falling demand in key sectors including real estate, automobiles and energy. The pollution control measures proposed by the Ministry of the Environment could also lead to a reduction in steel production in 2019.

Meanwhile, Morgan Stanley believes that the Chinese metals sector has bottomed out. He predicts very strong steel demand in 2019.