Steel production in China in September reached a 3-month high on expectations of construction demand

China's crude steel production rose to its highest level in three months in September as steel mills ramped up production in anticipation of increased construction activity ahead of winter.

The world's largest steelmaker produced 86.95 million tons of the metal last month, up 3.7% from 83.87 million tons in August, according to data from the National Bureau of Statistics on Monday.

As a result of September production, China's total production in January-September was 780.83 million tons, down 3.4% year-on-year and compared to a 5.7% decline in January-August .

Production rose 17.6% from the same month last year, accelerating from a 0.5% rise in August to the highest since March 2021, according to data from the World Steel Association.

The Brussels-based group expects steel demand in China to fall by 4% for the full year, leading to a projected 2.3% contraction in global demand on the back of rising inflation and rising interest rates.

BHP Group CEO Mike Henry on Friday pointed to a 1-2% drop in China's steel production this year before rebounding 1% next year, adding that 2022 could still be the year of "another billion tons plus".

China's average daily production in September was 2.9 million tons, compared with an average of 2.71 million tons in August, according to Reuters calculations.

Chinese steel mills closed several blast furnaces in the second quarter as iron ore prices soared, while domestic demand for the metal fell due to problems in the country's giant real estate sector.

However, many plants have resumed production ahead of the peak construction season in September and October.

Stocks of imported iron ore at Chinese ports stood at 131.2 million tons as of October 14, according to consulting firm SteelHome, having steadily declined over the previous four weeks.