China May crude steel output rises 1.6% month on month to hit record

BEIJING (Reuters) - China's crude steel output hit a monthly record in May, rising 1.6% from April following resilient downstream demand and firm profit margins, despite a steep drop in margins towards the end of the month.

The world's top steel producer made 99.45 million tonnes of crude steel last month, data from the National Bureau of Statistics (NBS) showed on Wednesday. That compared with 97.85 million tonnes of output in April and was 6.6% higher than in May 2020.

Average daily output of the metal fell 1.5% from a month earlier to 3.21 million tonnes, Reuters calculations based on the NBS data found.

Steel prices surged to an all-time high in mid-May, fuelled by firm demand at home and abroad as well as speculative buying as prices rose.

China said in late May it would strengthen price controls to address abnormal fluctuations in prices, which led to a collapse in mills' profit margins as steel prices fell faster than raw material prices.

However, Tang Chuanlin, analyst with CITIC Securities, said the mills' overall profits in May were still good.

"It won't cause a big change to mills' production unless they suffer losses for longer than a month," Tang said before the data was released.

In the first five months of the year, China produced 473.1 million tonnes of crude steel, up 13.9% from the same period a year earlier, the statistics bureau data showed.

(Reporting by Min Zhang and Dominique Patton, editing by Louise Heavens and Barbara Lewis)