December’s crude steel production figure from the National Bureau of Statistics (NBS) came in slightly lower than expected, with reported daily output at the lowest level since the summer. Taking into account yield loss, net exports and inventory changes, Chinese end user steel demand in 2016 managed a small 0.61% increase from 2015 to 668.57 million tonnes, Kallanish calculates.

2016 crude steel production was up 1.2% at 808.37mt according to NBS, making it the second highest figure below 2014’s reported 822.7mt. December’s crude steel production was up 3.2% y-o-y at 67.22mt, but on a daily basis this was just 2.17mt, down -1.9% from November and the lowest level since the 2.16mt reported in July.

Thanks largely to the -4.4% decline in net exports to 95.22mt, apparent finished steel demand in 2016 was up 1.96% y-o-y to 672.16mt. December’s apparent demand was actually down -4.59% from November but was still 9.26% higher than the appallingly low figures recorded at the end of 2015.

The final factor however was the increase in market inventories both over the month of December and year-on-year. Although reported steel mill inventories were down slightly, this was far outweighed by an increase in trader inventories, in part the result of greater confidence in the market this year. That meant that the amount of steel that actually went to end users was down -7.36% y-o-y and -11.36% month-on-month in December at 52.6mt, bringing the 2016 total to 668.57mt. This was up 0.61% from 2015 but still down -7.2% from peak steel demand of 720.42mt in 2014.