China's Major Steel Producers Cut Output in August

China's Steel

China's largest steel-producing provinces reported significant decreases in output during August, with Hebei province leading the drop at 18 percent. According to data from the National Bureau of Statistics (NBS), the five key provinces—Hebei, Jiangsu, Shandong, Liaoning, and Shanxi—collectively produced 40.3 million tons of steel in August. This represents a 13 percent decline from the previous year, accounting for 51.7 percent of the nation's total steel output for the month.

Hebei, the top steel producer in China, saw its output shrink to 14.89 million tons, an 18 percent decrease. Jiangsu's production fell by 12 percent, reaching 9.35 million tons. Shandong and Shanxi reported similar year-on-year declines of 12 and 13 percent, respectively, while Liaoning's steel output dropped marginally by 0.7 percent to 5.65 million tons.

The nationwide steel output also followed the downward trend, declining by 10.4 percent compared to the same period last year. In the first eight months of 2024, China's steel production decreased by 3.3 percent, with the top five provinces experiencing a 5.6 percent reduction.

Steel Prices and Demand

Several factors contributed to this cutback in production, including falling steel prices and weak demand. Shanghai’s hot-rolled coil (HRC) ex-warehouse prices hit a seven-year low in August, dropping by 260 yuan per ton ($36.90) from the beginning to the end of the month. The decline in prices and the sluggish real estate market forced many steel mills to reduce production to clear out inventory based on old standards before the new national rebar standard takes effect in September.

However, experts expect Chinese steel mills to increase production in September after August's maintenance period, as demand is likely to recover from the summer slump.