China's steel, cement sectors face weak output in Q3: Fitch

By Ovunc Kutlu

ISTANBUL (AA) - China's steel and cement sectors are expected to face weak production in the 3rd quarter of this year, Fitch Ratings said Friday in a report.

Some of the reasons behind the expectation include subdued property and infrastructure demand, slower construction activities in the summer season, and production curtailments, it said.

China’s crude steel production fell by 1% annually in June due to weak margins and soft demand, said the report.

Although raw material prices decreased, resulting in some margin recovery, the average selling price for steel also fell, reflecting the overall market softness, it added.

The cement sector experienced a more severe 7% annual decline in production, due to a sustained decrease in property investments and slower infrastructure investment growth, according to the report.

While the average selling price of cement was 15% lower year-on-year, it showed some sequential improvement as producers cut production to prevent further price declines, it noted.

China's aluminum production, on the other hand, is likely to increase due to continued strong manufacturing activities, according to Fitch.

Aluminum output was supported by strong investments in green energy, auto and home appliance sectors, which pushed its average selling price to a two-year high by the end of May this year, it said.

"We expect steel and cement production to remain prudent in 3Q24 due to low seasonal demand and production curtailments," said the report. "However, aluminum production is likely to continue increasing as more capacity is released and downstream demand remains resilient."