China April Crude-Steel Output Falls 3.1% From March

By Lee Spears and Nerys Avery

May 11 (Bloomberg) -- Crude steel output in China, the world’s largest producer, fell 3.1 percent in the first 20 days of April compared with the daily average in March, the Ministry of Industry and Information Technology said.

The daily average production dropped to 1.41 million tons, the ministry said on its Web site today. Still, output was higher than the daily average of 1.37 million tons for the whole of last year, the ministry said.

Chinese steelmakers, which posted a first-quarter aggregate loss of 3.3 billion yuan ($484 million), need to rein in output to prevent an oversupply from depressing prices, according to the China Iron and Steel Association. China’s benchmark prices gained 2.3 percent last week.

“Recent gains in steel-product prices are mainly the result of a seasonal pickup in construction in the north, increasing demand and restocking,” the ministry’s statement said. “The outlook for the market is still sober as overcapacity persists and there’s yet to be a clear recovery in demand.”

The average spot price of Chinese hot-rolled steel, the benchmark, rose to 3,514 yuan on May 8 from 3,460 yuan a week earlier. The benchmark has fallen 11 percent this year.

Commercial stockpiles of steel products in major cities declined 8.1 percent from March to 9.96 million tons, led by the destocking of wires and reinforcement bars used in construction, the ministry said. The price of wiring rose to 3,387 yuan a ton, 82 yuan above this year’s lowest price, it said.

Rebar rose to 3,441 yuan a ton, or 74 yuan above 2009’s lowest level, the statement said. Hot-rolled plates increased to 3,319 yuan, or 87 yuan above the year’s lowest price, it said.

To contact the reporter on this story: Lee Spears in Beijing at lspears2@bloomberg.net.