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Final December Chinese steel production rose 1.2% to 1.683 million tonnes per day (mtpd) – in line with the normal seasonal uptick – from November’s 11-month low of 1.663 mtpd, and was some 1.8% higher than the China Iron & Steel Association (CISA)’s estimated December production of 1.654 mtpd.  While the increase was the first since June, December output was still some 15.8% below peak levels posted during that month.  December production also annualized at just 614.1 mt, significantly less than full-year 2011 production of 683.3 mt and even full-year 2010 production of 626.7 mt.

Despite the overall increase, we would point out that CISA’s “production flash” reports for December showed that production declined in each successive 10-day period, so by late December, output of 1.626 mtpd was at the lowest level since October 2010.

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The American Institute of Architects’ ABI Index – a leading economic indicator of nonresidential construction activity 9-12 months into the future – remained unchanged from November at 52.0 in December, the highest level in a year and the first time the ABI Index has seen consecutive readings over 50 since February and March of 2011. The reading above 50 means the number of architects reporting “rising billings” outpaced the number reporting “declining billings.”

At 64.0 in December, the new inquiries index was the third highest since January 2007, despite falling from 65.0 in November. While we are typically a bit cautious about putting too
much weight on the new inquiries index because it does not account for rebidding, we would note that the new inquiries index has been much higher the past two months than during the
first 10 months of the year when it ranged from 52.6 to 58.7 and the significantly higher readings have in fact coincided with higher overall ABI readings.

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