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According to the China Iron and Steel Association, Chinese steel production for the middle 10 days of May eased a scant 0.3% from a record 2.045 million tonnes per day (mtpd) in early May to 2.039 mtpd, although even including the decline, the full month would come in some 1.1% higher than April.

We are surprised at how quiet Beijing has been in resisting scolding its errant loss-making steelmakers for overproduction, and in fact has been instead soothing steelmakers’ nerves with promises of new projects and economic growth; we see this backfiring by keeping production levels high.

Typically, at this point in a steel pricing rout in China, we’d be seeing one of two things – first, up until 2009 we generally saw ramp-up of export tax rebates – vigilance by the rest of the world rattling trade sabers has most probably kept Beijing from going this route.  Second, we normally see noise and threats from Beijing about cutbacks.

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