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Contrary to CISA’s June production estimate showing a nominal monthly drop, official June output came in at 2.01 million tonnes per day (mtpd), up 1.6% from May, to the second highest of all-time, and just 0.6% shy of April’s all-time record.

The uptick in Chinese production in the face of waning steel demand is disconcerting as steelmakers have continued to ship overproduction around the globe, resulting in June net Chinese steel exports rising 5.4% to a two-year high of 4.09 mt.

While Beijing’s multiple stimulus-attempts are good news longer-term for steel in China, in the short term, we believe that stimulus announcements are backfiring, keeping production too high, as steelmakers wait for promised new orders to come in as they continue to lose money.

Our full report is available to subscribers only and provides further thoughts on June Chinese steel production and the implications for steel equities.

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