China April crude steel output hits record

China April crude steel output hits record. China's average daily output of crude steel in April hit a new record of 1.97 million metric tons as mills sought to maximize sales before expected further policy tightening bites harder into property sector demand. Against the backdrop of steel price cuts in recent months, the high level of production masks concerns--most of which began cropping up mid-April--over waning industrial demand amid the government's monetary policy tightening. Crude steel output rose 7.1% from a year earlier to 59.03 million metric tons, though it slackened from 59.42 million tons in March, the National Bureau of Statistics said. "If you look at the average daily output from the middle of April, you can see output had actually begun declining compared with the first 10 days of the month," said Li Bin, a steel analyst with Beijing-based CRU Group consultancy. Steelmakers had initially fired up furnaces on the conventional perception that the second quarter is a period of strong demand, and with expectations of additional demand from Japan following a massive earthquake. "However, later in April, it became apparent from macroeconomic policy that downstream demand may in fact be slowing, primarily due to cooling in auto production and construction," Li said. The construction sector, including infrastructure, commercial and residential properties, accounts for about half of China's steel consumption, with residential construction accounting for the lion's share of about 40%. Construction projects originally scheduled to begin in March are being deferred to April and May as the government continues to maintain a regime of tight interest rates and bank reserve ratio requirements. Analysts have been warning that Chinese steelmakers can't sustain the scorching pace of production so far this year. "This level of production is excessive from a property-related perspective, as the property sector isn't growing and may in fact shrink," said Ma Haitian, an analyst with the Beijing Antaike metals consultancy. In the first four months, China produced 229.71 million tons of crude steel, up 8.3% from a year ago, the bureau said. Steelmakers have already begun to reduce prices, anticipating weaker demand. "They were cutting prices to move product, and we'll expect to see more price cuts going into June and July," Ma said. On a broader macroeconomic level, national output and price data both suggest the Chinese economy was cooling in April, with industrial output posting the sharpest pullback since mid-2010, Xianfang Ren and Alistair Thornton wrote in a research note for IHS Global Insight. China produced 97.8 million tons of iron ore in April, up 13.7% from a year ago. In the first four months, output was 347 million tons, up 14.6%. April output of pig iron, an intermediate product, rose 7.7% to 55 million tons. In the first four months, production rose 7.3% to 214.3 million tons.