Chinese steel production posts weak start to the year

Jessica Morris
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Chinese steel output fell last year for the first time since 1981. (Source: Getty)

Chinese steel production got off to a disappointing start this year, as the industrial commodity continued to be hampered by a chronic oversupply.

Steel output in January and February continued to fall, shedding 5.7 per cent year-on-year to 121.1m tonnes, data from China's statistics bureau showed today. This helped prompt a further 10.4 per cent drop in the output of coking coal, which is a key steel-making ingredient.

China's economy is transitioning to a “new normal” of lower growth, driven by consumption and services instead of investment and manufacturing.

However, falling demand has hurt the country's steel mills, forcing them to cut costs as well as axe jobs. Output fell last year for the first time since 1981.

"Demand is basically steady and I certainly haven't seen any explosive demand or any large stimulus policies coming out from the state," Cao Huiquan, chairman of Hunan Valin Iron and Steel Group, told Reuters.

It only releases combined data for the first two months of the year, because the week-long Spring Festival holiday, which is based on a traditional lunar calendar, can fall in either month. Steel production tends to fall before and during this period, before bouncing back afterwards.

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