China appears to have been routinely underestimating output from its sprawling steel sector, with official figures for last year alone 40 million tons below a key industry estimate – an amount equivalent to Germany’s entire annual production, Reuters reported.
Beijing has vowed to cut overcapacity in its steel sector, the world’s biggest, but huge discrepancies in the data suggest that policies aimed at cutting emissions and modernizing the economy are often not being implemented on the ground.
Cash-strapped local governments have an incentive to turn a blind eye to unauthorised but profitable steel production rather than risk job losses and mill closures by forcing them to comply with Beijing’s new efficiency or emissions targets.
Chinese steel prices were mixed for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($135.19) and a low price of CNY 840.00 ($135.19) per dry metric ton. The price of Chinese slab rose 3.5% yesterday, just off the 30-day low of CNY 2,990 ($481.22) per metric ton it hit on Tuesday, December 16. After two flat days, the price of Chinese HRC inched up 3.2% on Thursday to CNY 3,190 ($513.41).
The cash price of steel billet was unchanged on the LME at $500.00 per metric ton. For the fifth day in a row, the steel billet 3-month price remained essentially flat on the LME at $480.00 per metric ton.
The spot price of the US HRC futures contract moved on Thursday. After a few changeless days, prices dropped 1.5% to $605.00 per short ton. After a couple of days of decreasing prices, the 3-month price of the US HRC futures contract held steady at $606.00.