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China November steel output hits 7-month low on plunging profits, winter curbs

Chinese national flags are flying near a steel factory in Wu'an, Hebei province, China, February 23, 2017. REUTERS/Thomas Peter/Files (Reuters)

BEIJING (Reuters) - China's crude steel output dropped to its lowest in seven months in November, government data showed on Friday, hit by shrinking profit-margins at mills and winter restrictions on emissions.

The world's top steelmaker produced 77.62 million tonnes of steel last month, down from a record 82.55 million tonnes in October and the weakest level since April, data from the National Bureau of Statistics (NBS) showed on Friday.

That compares to 66.15 million tonnes in November last year.

Average daily output also dipped to the lowest level since April, at 2.59 million tonnes, according to Reuters calculations based on the NBS data. But that was still much higher than the 2.2 million tonnes per day produced in November 2017.

Profit-margins at Chinese steel mills plunged more than 66 percent in November, data tracked by Jinrui Futures showed, because of oversupply in the market and tepid demand from end-users.

The weekly utilisation rates at blast furnaces in steel mills in China were around 67 percent last month before dipping to 65.75 percent this week as winter restrictions started in mid-November, according to data from Mysteel consultancy. That is up from 62 percent in same period last year.

The China Metallurgical Industry Planning and Research Institute, a government consultancy, expects China's 2018 crude steel output to reach a record of 923 million tonnes due to firm demand and fat profit-margins this year.

However, output for the rest of 2018 may fall as mills might be ordered to halt some production to reduce emissions under pollution control rules.

Major steelmaking cities Tangshan and Xuzhou have asked mills to further curtail output as city officials are concerned they will not meet their pollution reduction targets for the year.

The government expects several bouts of heavy pollution to blanket northern China in December. The industrial heartland of Hebei, Shandong and even the southwestern province Sichuan have issued smog alerts this week.

Output over the first 11 months of the year was 857.37 million tonnes, up 6.7 percent on the same period last year, according to the NBS data.

(Reporting by Muyu Xu and Dominique Patton; Editing by Joseph Radford)

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