Four of the seven largest steel-producing provinces in China recorded a decline in steel production during the January-April 2024 period, according to data from BigMint.

Hebei province, the leading steel region, reduced its production by 3% year-on-year to 74 million tons, after steady growth in the first two months. Jiangsu maintained production at last year's level of 42 million tons.

Shandong, Liaoning, and Shanxi provinces experienced decreases of 3%, 10%, and 13%, respectively, totaling 68 million tons, compared to 74 million tons in 2023. In contrast, Guangxi and Guangdong saw production increases of 15% and 2%, respectively, reaching a combined 27 million tons.

Several factors contributed to the decline, including an increase in inventories at Chinese steel mills due to low demand, reaching almost 20 million tons in mid-March, one of the highest levels in the past four years. Sluggish domestic demand, particularly from the real estate sector, also played a role.

While China's steel exports grew in quantity during this period, the value of exports fell sharply. Rationalization of production led to a reduction in steel mill margins, as domestic steel prices declined every month. For instance, hot-rolled coil (HRC) prices in Tangshan fell by almost 6% from January to April.

In May, the steel market showed signs of recovery, with domestic prices, futures, and export offers increasing. However, raw material prices also trended upward, and steel warehouse stocks increased by 3% as of mid-May.

Overall, in January-April 2024, Chinese steelmakers reduced steel production by 3% year-on-year to 343.67 million tons. In April, production fell by 2.6% month-on-month and 7.2% year-on-year to 85.94 million tons.