Bloomberg News

China’s Steel Output Rises to Record on Construction Demand

June 14, 2011

(Updates with analyst’s comment in fourth paragraph.)

June 14 (Bloomberg) -- China steel production rose to the highest on record last month, boosted by construction demand.

Crude-steel production from the world’s biggest steel producer rose 7.8 percent to 60.25 million metric tons in May from a year earlier, according to data released today by the Beijing-based National Bureau Statistics.

Construction of new properties in China, the world’s second-largest economy, climbed 24 percent in the first five months, even as the government tried to slow the economy. China wants to cool the real-estate market and rein in bank lending to counter inflation.

“China’s tightening measures have had little impact on builders,” said Henry Liu, a Hong Kong-based analyst with Mirae Assets Securities Ltd. “Construction at China’s second and third-tier cities remain active.”

Chinese prices of reinforcing bars, used to build homes, bridges and roads, have climbed for four straight weeks to 5,036 yuan ($777) a ton as of yesterday, according to researcher Beijing Antaike Information Development Co. Prices of hot-rolled coil, a benchmark flat product, fell 0.5 percent in the same period to 4,850 yuan.

Smaller steelmakers in China are likely to benefit from the stronger prices for construction steel, while bigger mills are suffering because they make flat products used by automakers and appliances, Liu said.

Baoshan Iron & Steel Co., China’s biggest publicly traded steelmaker, cut product prices by between 100 yuan and 200 yuan a ton for July delivery on June 9 because of slowing demand from automakers and appliances companies.

--Helen Yuan, Editors: Rebecca Keenan, Indranil Ghosh

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net


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