Morning Bites

🔗CISA mills daily crude steel production in early-May was 2.11mnt, up 3.6% from the previous ten days, but 4.3% lower YoY. Per CISA data, local production slid 6.2% YTD (through 10 May). Meanwhile, local steel inventories rose 9.4% over the period, and were 5.1% higher YoY

Given the ongoing weakness in the global steel market, we believe that Beijing will continue to tighten supply on a gradual basis, even though the current five-year plan lacks explicit targets for capacity cuts. After a surge of exports in 2023–25 that weighed on global prices, further gradual supply-side measures from China (>50% of world steel supply) could help rebalance the market and support steel prices in the medium term

Specifically, this week, China released a tougher steel capacity swap plan to curb oversupply. According to the statement of the Ministry of Industry and Information Technology, at least 1.5t of old steel capacity now needs to exit to build ⁠every 1.0t of new capacity nationwide

#steel