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China's crude steel production in August dropped 6.1% from July to 77.92 million metric tons, marking the third consecutive month of declines. This sharp fall is attributed to weaker steel prices due to sluggish demand from the property and manufacturing sectors. Daily output in August averaged 2.51 million tons, down from 2.68 million in July. Analysts noted that while robust steel exports provided some relief, domestic challenges remain. Steel mills face continued pressures, but a production rebound in September is expected as margins improve. China's cap on steel output for 2024 remains uncertain, affecting market sentiments.

Key Highlights

* China's August steel output fell 6.1% from July to 77.92 million tons.

* Weak steel prices, sluggish demand hit production; lowest since December 2023.

* August daily output averaged 2.51 million tons, down from July's 2.68 million.

* Robust steel exports helped ease some domestic supply pressures last month.

* Steel production may rebound in September as mills resume operations.

In August, China's crude steel production fell 6.1% from July, hitting 77.92 million metric tons, its lowest level since December 2023. This marks the third consecutive monthly decline in steel output as steelmakers grappled with weakening steel prices and lackluster demand. Seasonally low consumption, paired with a slowdown in the property and manufacturing sectors, further dampened the steel market, weighing heavily on production.

Steel prices have seen considerable pressure from an array of disappointing economic data, particularly from the property sector, which is a key consumer of steel. Daily crude steel production in August averaged 2.51 million tons, lower than the 2.68 million tons in July. On a year-on-year basis, the output for August showed a 10.4% decrease.

Despite these challenges, robust steel exports helped ease some of the domestic oversupply, providing temporary relief to the sector. However, total crude steel output for the first eight months of 2024 was down 3.3% year-on-year, reflecting the broader pressures on the steel industry.

Analysts expect steel production to pick up in September as certain steel mills have resumed operations due to improved margins. However, uncertainty looms over the timing and scale of China's steel output cap for 2024, which could significantly influence production in the coming months. Baoshan Iron & Steel Co.'s chairman hinted that flat production this year may not solve the industry's oversupply issues.

Finally

Steel production in China fell in August, but a rebound is anticipated in September, although uncertainties surrounding the country's steel output cap still cloud the market outlook.

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