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China's finished steel output may be overstated by 100 million mt

https://www.chemnet.com   Nov 16,2007 Platts
China's finished steel output may be overstated by 100 million mt/year, a leading steel analyst told Platts Thursday. The country's crude steel production for October was 42.92 million mt, according to a report published on the National Bureau of Statistics of China web site Thursday. Finished steel output for the month reached 49.08 million mt, according to the NBS, and that's the problem--finished steel output cannot be higher than crude production.

"It's impossible," Charles Bradford of Bradford Research in New York, told Platts. "I get monthly data directly from 75 mills in China; data for pig iron output, crude steel production and finished steel--and the finished steel is consistently less than crude."

Steelmakers know there is always a yield loss when casting and rolling steel from its liquid, or crude, state. Generally, finished steel output is 85-93% of crude production.

Bradford speculates that something goes awry between the time data is reported by the Chinese mills to the government and the release of official statistics. "It looks like a lot of double-counting is going on," he said. "For example, a mill ships 5,000 tons of hot-rolled coil to a re-roller, which is then processed into cold-rolled coil. The tonnage gets counted twice," Bradford explained.

To reconcile the NBS data, Bradford said he takes 90% of the reported crude production to arrive at a finished steel-product figure. So, October's 42.92 million mt of crude output would mean 38.63 million mt of finished steel, which is nearly 11 million mt below the government figure of 49.08 million mt.

"On an annual basis," noted Bradford, "finished output may be overstated by 100 million metric tons."
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