BEIJING: China’s crude steel output fell more than 6% in March from the same month a year earlier, data from the statistics bureau showed on Monday, as production at mills was crimped by COVID-19 outbreaks and environmental restrictions.
The world’s top steel producer made 88.3 million tonnes of the metal last month, down from 94.02 million tonnes in March 2021, said the National Bureau of Statistics (NBS).
Average daily output in March stood at 2.85 million tonnes, according to Reuters calculation based on the NBS data. That was down from 3.03 million tonnes in the same month last year but up from 2.68 million tonnes in January-February.
Production curbs at northern steel mills that aimed to cut pollution and improve air quality during the winter heating season and Beijing Olympics were planned to end in mid-March, after being implemented for around half a year.
However, the recent COVID outbreaks in the country have put a dent in both steel production and consumption.
“One of the biggest restraint on production is that the COVID-related restrictions hinder steel mills from replenishing raw materials,” said Tang Binghua, an analyst with Founder CIFCO Futures in Beijing.
China’s steel hub Tangshan city issued a temporary lockdown in late March after detecting several locally transmitted cases, forcing plants to cut production due to the disruption.
Furthermore, a lockdown in Shanghai following the worst COVID wave since the initial Wuhan outbreak of coronavirus also hampered downstream steel consumption, which typically peaks during the March-May period.
Meanwhile, increasing steel scrap prices – also partly resulting from disrupted transportation – squeezed some producers’ profits and forced them to reduce output, according to analyst Tang.
In the first quarter, China churned out 243.38 million tonnes of steel, down 10.5% from 271.04 million tonnes the same period a year earlier, the statistics bureau data showed.