China's steel output surged to a record in May, as mills ramped up production to chase fat profit margins, with a strong outlook for demand likely to keep mills running at nearly full capacity for the rest of the year.
The increased output comes despite China's efforts to limit production in key areas as part of its anti-pollution campaign.
China produced 81.13 million tons of crude steel last month, up 5.8 percent from the previous month and 8.9 percent from the same month in 2017, according to data from the National Bureau of Statistics (NBS).
Daily average output climbed 2.4 percent to 2.62 million tons in May from April, according to Reuters' calculations based on the official NBS data.
"Steel mills have been running full-load and adding scrap steel to increase output in order to cash in on strong margins," said Zhuo Guiqiu, senior analyst at Jinrui Futures.
Given firm demand and smog-battling production curbs in areas including the key steelmaking hubs in North China's Hebei Province and East China's Jiangsu Province, analysts say mills can earn up to 900 yuan ($141) by producing a ton of steel at present, not far from the more than 1,000 yuan seen in late 2017.
"Demand from downstream sectors may be better than expected," said Zhuo. "The market generally believes the infrastructure construction sector is more active in the second half than in the first half, which could lift demand for steel products."
