China’s daily crude steel output slid in November to the lowest in nine months, government data showed on Thursday, as state-imposed curbs aimed at battling smog slowed production at mills in the northern part of the country.
Steel output in the world’s biggest producer is expected to fall further with the curbs in place through March, analysts say. That will likely keep steel prices, up nearly 50 percent this year, elevated.
Daily average steel output dropped to 2.205 million tonnes in November from 2.334 million tonnes in October, according to Reuters’ calculations based on data from the National Bureau of Statistics.
Overall output fell 8.6 percent to 66.15 million tonnes in November from October, but was up 2.2 percent from a year ago, according to the data. The daily average and monthly output was the lowest since February.
China ordered steel mills and coke plants in 28 cities to cut production between Nov. 15 and March 15 to help clear the country’s smoggy skies.
The move has reduced steel supply at a time when demand from southern regions was firm, helping lift steel prices by nearly 10 percent last month.
“Output will continue to fall from December onwards due to the winter cuts,” said Richard Lu, analyst at CRU consultancy in Beijing.
“Even if demand will be seasonally weaker, we think tighter supply will remain a strong support to steel prices,” said Lu. Some cities outside those 28 covered by Beijing’s initial orders have also volunteered to reduce production to help improve air quality, he said.
Year-to-date production rose 5.7 percent to 764.8 million tonnes from a year earlier, putting China on track for record output this year.
China’s steel output is expected to rise 3 percent to 832 million tonnes this year, and by a further 0.7 percent to 838 million tonnes in 2018, the China Metallurgical Industry Planning and Research Institute said this month.