Chinese crude steel production totaled 94 MMT in March, rising 19% YoY and marking the second highest monthly total on record.

This brings production over Q1 to 269 MMT, up by 15% YoY, though this is in part a reflection of weaker output during the country’s Covid-19 outbreak. Economic activity since recovered and continued to drive growth in steel output.

Chinese steel exports saw their highest monthly total since 2016 with 4.3 MMT of steel heading to foreign buyers. Supras have been the primary beneficiary of this trend, with these ships accounting for 70% of all steel exports in March, rising 92% YoY to 3.1 MMT.

We expect Chinese steel output to remain strong over Q2, but to come under further pressure from regulators later in the year.

One of the drivers of increased steel output is China’s construction and property sectors, which saw activity continue to grow in March.

Fixed asset investment in infrastructure increased by 31% YoY in March for the second month in a row as stimulus continues to move around the economy.

Initiated floor space of newly started houses increased 30% YoY in March rising to 271m square meters, aided by a 26% YoY jump in investment in real estate.

Despite reports suggesting the People’s Bank will tighten lending restrictions in the near future, new loans in March totaled 2.7 trillion yuan, flat YoY.

This brings Q1’s total new loans to 7.7 trillion yuan, up by 8% YoY, though we expect conditions to tighten later in the year.