CHINA’S steel mills are rapidly cranking up output on rising profit margins and hopes that government stimulus will revive consumption, despite an overhang of inventories and a slowdown in global steel demand due to the coronavirus pandemic.

While mills in Japan, India and Europe are cutting production, China’s output of rebar, used for construction, has surged in recent weeks.

The push risks saddling producers with excess supplies that may be hard to offload, analysts say, and could undermine efforts to rationalize a bloated steel sector. The main industry body warned this week against adding to production or re-starting closed capacity while demand remains fragile.

China churned out 234.45 million tons of crude steel in the first three months, up 1.2 percent compared with same period a year earlier.

Blast furnace utilization rates at 247 Chinese steel plants have increased for six consecutive weeks from less than 74 percent in mid-March to 80.59 percent as of April 24, sending weekly output of finished products to the highest in about four months, data tracked by Mysteel consultancy showed.

Production of construction material steel rebar, more popular with private and smaller mills, has jumped 43 percent since mid-March. Production of wire rod, also used in construction, is up 31.6 percent. (SD-Agencies)