October 18, 2019 / 3:03 AM / a month ago

China September steel output skids to six-month low on anti-pollution curbs

BEIJING (Reuters) - China’s monthly crude steel output slid to a six-month low in September, official data showed on Friday, as mill operations were hit by a raft of restrictions aimed at cutting pollution ahead of parades marking the country’s National Day on Oct. 1.

FILE PHOTO: A worker walks past steel rolls at the Chongqing Iron and Steel plant in Changshou, Chongqing, China August 6, 2018. REUTERS/Damir Sagolj

Total output fell 5.4% to 82.77 million tonnes last month from 87.25 million tonnes in August, the lowest level since March, data from the National Bureau of Statistics (NBS) showed on Friday. But September production was up from 80.85 million tonnes in the same month last year.

Average daily output in September was 2.76 million tonnes, according to Reuters calculations based on the NBS data, down 1.8% from the previous month.

For the first nine months of the year, China churned out 747.82 million tonnes of steel, up 8.4 % from the same period last year, the NBS data showed.

Production curbs in northern China ahead of the National Day celebrations came as major steelmaking districts in the Beijing-Tianjin-Hebei zone issued a pollution alert in the final week of September.

The weekly utilization rate at blast furnaces in steel mills across the country plunged in late September, falling to 56.2% in the week ended Oct. 4, the lowest level in more than seven years, according to data compiled by Mysteel consultancy.

September’s output drop came before the Ministry of Ecology and Environment outlined its annual anti-pollution plan for this year’s winter heating season, setting a target for concentrations of harmful PM2.5 emissions to be cut by an average of 4%.

But analysts do not expect a plunge for steel output in coming months.

“Environmental restrictions are not the decisive factor for steel supply,” said Tang Binghua, analyst with Founder CIFCO Futures, speaking before the data was released. “Output is mainly driven by profits.”

Meanwhile, the real estate construction business, a big steel consumer, remains resilient enough to shore up demand for the metal, said Wu Shiping, analyst with Tianfeng Futures.

China’s property investment grew 10.5% year on year in September, boosted by a higher pace of new construction starts, which quickened to a 6.7% rise from a year earlier, according to Reuters calculation based on official data released on Friday.

Reporting by Min Zhang and Shivani Singh; Editing by Kenneth Maxwell

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