The Strategist

China shows record steel production in 2019, aluminum production falls

01/17/2020 - 09:20

In 2019, steel production in China reached a record level of almost 1 billion tons. At the same time, annual aluminum production fell for the first time in 10 years, the State Statistical Office of China reported.

The world's largest steel producer in 2019 produced 996.34 million tons of steel, which is 8.3% more than the previous record set in 2018.

In December, steel production in China increased by 12% compared to the same period last year to 84.27 million tons, which is the highest since August. The average daily production in December grew by 1.5% compared with November, and amounted to 2.72 million tons, according to Reuters estimates based on official data.

Demand for steel in China remained steady in 2019, despite the fact that the world's second largest economy was under pressure due to a slowdown in economic growth and a trade war with the United States.

The real estate market turned out to be more stable than expected. Rising infrastructure spending has also spurred demand for steel.

Economists at JPMorgan Chase & Co. note that China is shifting its focus on investment in infrastructure while abandoning the approach to reduce taxes for enterprises, which the government preferred in previous years. This year, infrastructure is expected to become the “key beneficiary” of fiscal policy.

Last year, aluminum production in China fell to 35.04 million tons, which is 0.9% less than the record high in 2018. According to the statistics agency’s website, the last time an annual decline in aluminum production in China was observed in 2009.

The drop in production was due to unplanned shutdowns of large steel plants in August.

The December aluminum output amounted to 3.04 million tons, which is 4.9% more than in the previous month.

According to Reuters estimates, last month, production averaged about 98 thousand tons per day, compared with about 96.6 thousand tons per day in November.