China Steel Mills Work Nonstop

Global steel production fell a modest 0.2% to 3.62 million tonnes per day in October from 3.63 in September. October production fell in most regions, with Africa down 5.0%, the Middle East down 2.3%, North America down 0.6%, and Asia down 0.6%.

Meanwhile, production rose by 2.7% in the EU-27 and 0.5% in South America. Total steel production for the month rose 3.1% sequentially to 112.2 million tonnes due to the extra day in October.

Chinese production fell a nominal 1.2% to 1.67 million tonnes per day in October despite claims by CISA that domestic mills would be cutting back in the month. China's steel mills seem staunch in their commitment to run flat-out in what appears to be a pissing contest -- with the lower-cost larger mills refusing to cut production -- and talking openly of this refusal - while the smaller high-cost and "backwards and polluting" provincial mills of course are also running flat-out.

We do not expect to see a significant reduction in production levels in November, as Chinese steel prices have risen in the last few weeks despite near record high production levels and high inventory levels. Chinese steel exports surged 10% in October -- the fifth straight monthly increase -- and we expect exports to increase still further in the coming months as the country ships its overcapacity problem to the rest of the world.