Reuters quoted industry sources said China daily crude steel output rose 1.1% in early August from late July, belying expectations for a modest fall as many steel mills resumed production after a round of brief maintenance in mid July.

The persistent supply glut and swollen inventories will curb gains in steel prices in autumn when demand traditionally improves as construction projects pick up, putting further downward pressure on iron ore prices.

Industry consultancy Custeel.com said citing data from the China Iron & Steel Association that daily crude steel output was 1.970 million tonnes in the first 10 days of August up from 1.949 million over July 21 to 31.

Mr Qiu Yuecheng an analyst with Xiben New Line Co Ltd a spot steel products trading platform in Shanghai said "The only reason that comes to my mind is that steel mills have resumed production after this round of maintenance since mid-July."

He said that "Amid fears of losing market share and urging by local governments to maintain economic growth as well as the rapid fall in iron ore prices, steel mills are reluctant to cut production in a big way."

Shanghai steel futures fell to record lows on Friday hitting CNY 3,614 a tonne and are heading for their fifth weekly loss in six, trapping iron ore, the key steelmaking raw material, at 2-1/2-year troughs.

CISA estimated the country total production based on its members which comprise more than 70 large steel mills that account for about 80% of China total steel output.

Steel demand has remained weak since the start of this year as the world's second-largest economy grows at its slowest pace in more than three years.

Changes in daily output since the beginning of the year

In million tonnes

Source - Reuters

(www.steelguru.com)