China produced 91.58 million tonnes of crude steel in June, up 4.5% year-on-year, according to the National Bureau of Statistics (NBS). End-user steel demand, however, has pulled back from record highs in May, Kallanish calculates.

Crude steel production in June was a record 3.05m t/day, or an annualised 1.114 billion t/year. Over the first half of 2020, output was up 1.4% y-o-y at 499.01mt, according to NBS. Apparent steel demand has also been strong, with exports slumping and imports increasing to almost the same level. In June, estimated apparent steel consumption was up 9.39% y-o-y at 86.3mt, while apparent demand over January-June was up 4.09% at 456.89mt.

End-user demand, however, has already entered a summer lull. Heavy rains in southwest and eastern China have been impacting construction activity. As a result, the rapid drawdown in inventories over April and May has come to an end. Adjusting for inventory change, Kallanish calculates that end user buying in June was 89.09mt. That was still up 15.7% y-o-y but down -13.07% m-o-m. On a daily basis, real consumption was down -10.17% at 2.97m t/d.

Real demand is now essentially flat y-o-y at 426.25mt over January-June as recent months have compensated for lost demand during the lockdown earlier in the year.

Chinese steel prices had been declining in late June as real demand declined. So far in July, however, prices have increased despite the fact that demand has remained at a slightly lower level. Traders have been confident enough to hold inventory to the end of summer.