China’s major mills saw steel output continue to increase slightly in mid-April, according to the China Iron and Steel Association (CISA). That increase can only last so long however, with little effective capacity available to restart, Kallanish notes.

Major mills produced 1.69 million tonnes/day of crude steel over 11-20 April, up 0.09% from the previous period. Mills’ finished steel inventories meanwhile increased 0.69% over the period to 13 million tonnes, CISA says.

China’s rocketing prices over the last two months have now driven most of the capacity that can easily come onstream back into the market. Despite China’s massive nominal capacity, much of this has not been active for some time, and would need major maintenance before resuming production. With prices now looking shakier, the incentive to do this is already diminishing.

April will certainly be another strong month for steel production, but output could begin to fall in May. Whether a drop in supply is enough to support prices is another matter however.