China produced 72 million tonnes of crude steel in March, up 1.8% year-on-year, according to the latest National Bureau of Statistics data - the highest level that has ever been officially reported. Real steel demand was also strong but a closer look at the data shows neither production nor demand exceeded their 2014 peak, Kallanish notes.

Official crude steel output over January-March was up 4.6% at 201.1m t, NBS says. This is still below the 202.69m t reported over the same period of 2014 however, and later adjustments appear to have increased this figure to 203.56m t, although NBS does not detail its adjustments. This also does not take into account the impact of unrecorded production from induction furnaces. These were producing at their highest levels in 2014, reportedly up to 60m t/y of output, and has been largely halted in the first quarter of 2017.

Based off the official figures, apparent finished steel consumption was up almost 15% month-on-month and 6.26% y-o-y in March at 62.14m t. Over the first three months of the year, apparent consumption was up 10.20% at 173.8m t. Adjusting for market and steel mill inventories, implied end user buying was up 10.8% y-o-y at 72.94m t in March, the highest since May 2014. Over January-March, end user buying was up 3.6% at 149.86m t.

Both crude steel production and finished steel demand were strong in March, but remain below levels seen in 2014, especially once non-reported output is taken into account. A slowdown in inventory decline and the recent slump in buying and prices suggests however that output I particular is too high, and prices may have to fall further until output declines.