July data shows Chinese demand fell further from June, and that steel output fell on-year for the first time in 2021. Demand has been hit by weak construction activity in excess of the normal summer slowdown, and reduced output has not yet been enough to match the reduction in consumption, Kallanish notes.
At 86.79 million tonnes, crude steel output was down 8.4% year-on-year, and 7.55% month-on-month in July, according to the National Bureau of Statistics (NBS). Over the first seven months, crude steel output is now only 8% higher at 649.33mt, after increasing 11.8% over the first half.
Apparent steel demand was also down thanks to the lower output. Apparent demand was at 78.781mt in July, down 13.49% y-o-y and 6.63% m-o-m. Over seven months, at 588.77mt, apparent demand is now up 5.82% compared to this time last year.
The growth in inventory levels slowed down in July, but did not stop, and the inventory rate deteriorated significantly. Adjusting for inventory change, end user demand was down 7.9% y-o-y, and fairly constant m-o-m at 76.99mt. Taking into account the longer month however, end user demand was down 3.26% m-o-m at 2.484m t/d. Over the first seven months, end user demand is 7.54% higher on-year at 557.397mt. This also meant the July 2021 inventory rate (inventories/demand) was up from 107.5% last month and 100.62% in July 2020, at 111.14%.
