Steel production in China fell in June due to bad weather

China's crude steel output fell 3.3% in June from a year earlier, according to the Bureau of Statistics, as bad weather in recent weeks affected construction activity.

The world's largest steelmaker produced 90.73 million tons of the metal last month, according to data from the National Bureau of Statistics (NBS) on Friday.

This is 6% less compared to 96.61 million tons in May.

Average daily production in June was 3.02 million tonnes, according to Reuters analysis of NBS data. This compares with 3.12 million tons of daily production in May.

Severe weather has been experienced in China since June, with heatwaves in northern and central China pushing temperatures up to 40 degrees Celsius and heavy rains causing flooding in the south.

Several plants in China, the world's largest steelmaker, have also suspended production capacity or taken it into maintenance earlier than usual due to weak margins and high inventories.

Iron ore imports to China also declined year-on-year in June, albeit slightly, amid weaker demand from the steel industry.

“While the weather shocks have exaggerated the typical decline in June, the underlying trend in China's steel production remains positive,” Alistair Ramsay, vice president of Rystad Energy metals, said ahead of the statistical office's release.

“We forecast that steel production will recover its growth in the third quarter and reach 276.65 million tons before politicians start to get stressed and steelmakers leave. The volume of production will decrease to 261.74 million tons in the fourth quarter.”

China produced 526.8 million tons of steel in the first half of 2022, down 6.5% from the same period a year ago, according to the bureau of statistics.