October 19, 2018 / 2:49 AM / 8 months ago

China steel prices fall as output hits record, GDP slows

* Daily crude steel output at 2.7 mln T in Sept

* China Q3 GDP growth slowest since 2009

By Manolo Serapio Jr

MANILA, Oct 19 (Reuters) - Chinese steel prices fell 1 percent on Friday after data showed daily output in the world’s top steel producer climbed to a record in September and China’s economy slowed to the weakest pace since 2009.

The increased steel production came as mills chased strong prices and ahead of China-led output curbs during winter as the country aims for clearer skies.

The most actively traded January rebar on the Shanghai Futures Exchange was down 1 percent at 4,110 yuan ($593) a tonne by 0239 GMT. Hot rolled coil fell 1 percent to 3,875 yuan.

China’s crude steel production reached 80.85 million tonnes last month, up from August’s 80.33 million tonnes and from 71.83 million tonnes in September last year, government data showed.

That put average daily output in September at 2.7 million tonnes, the highest on record, according to Reuters’ calculations.

“Steel profits are still very high and that’s the reason why everyone is increasing production, to maximise their profits,” said Helen Lau, analyst at Argonaut Securities in Hong Kong.

The average profit margin at steel mills is currently running above 1,000 yuan a tonne, according to Huatai Futures.

The impact of government-led production curbs over winter would be the key driver for output in the fourth quarter, although Lau said they are likely to be more relaxed compared with last year’s.

China allowed local governments to set their own winter production restrictions this year, ditching last year’s blanket limits.

In Tangshan, China’s top steelmaking city, mills continued to ramp up output this month in the absence of detailed orders from the city government.

Also weighing on prices, China’s economy grew less than expected at 6.5 percent in the third quarter from a year earlier, marking its weakest expansion since the global financial crisis amid a trade war with the United States.

Prices of steelmaking ingredients also declined. The most-traded iron ore on the Dalian Commodity Exchange fell 1.4 percent to 516 yuan a tonne.

Coking coal slid 0.7 percent to 1,382 yuan a tonne and coke lost 2.7 percent to 2,383 yuan. ($1 = 6.9367 Chinese yuan) (Reporting by Manolo Serapio Jr.; editing by Richard Pullin)

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