Saudi pumps up oil production to record high 10.3 million bpd
Saudi Arabia has revved up crude production to its highest rate on record, feeding unexpectedly strong demand from foreign refiners and increased capacity at home.
Oil Minister Ali al-Naimi told reporters late on Tuesday that the Kingdom produced some 10.3 million barrels per day (bpd) of crude in March, a figure that would eclipse its previous recent peak of 10.2 million bpd in August 2013, according to records going back to the early 1980s.
Just a few weeks earlier, Naimi had pegged production at around 10 million bdp, some 350,000 bpd above what Saudi Arabia said it pumped in February. The Kingdom produces more than 10 percent of the world's crude.
Oil prices rallied on Tuesday on separate Naimi comments about working with other big producers to stabilize the market - something most analysts see as unlikely in the near future - but it was the production figure that raised eyebrows.
"While April and May could see a small pullback, overall it is clear that Saudi Arabia has reacted to stronger demand for their crude, despite being in an oversupplied market," Energy Aspects chief analyst Amrita Sen wrote in a note.
Demand was stoked in part by deep discounts on Saudi exports in March as the Kingdom offered Asian customers the deepest discounts on its flagship Arab Light crude in at least 12 years, according to Reuters data. ARL-OSP-A Saudi Aramco has raised its prices for the following two months, putting May at the highest level since last year.
U.S. imports of Saudi crude rose to more than 950,000 bpd over the four weeks to March 27, the highest since last September, U.S. data show.
The Saudi production figure also likely reflects some additional domestic refinery demand.
The 400,000 bpd Yanbu Aramco Sinopec Refining Co (Yasref) refinery, a joint venture between state oil firm Saudi Aramco and China's Sinopec, has been steadily ramping up production this year and was due to reach full capacity by mid-February. A venture with Total started up in late 2013.
"Production is always going to grab the headlines, but exports will be more important than ever to focus on," said Mike Wittner, Global Head of Oil Research at Societe Generale.
Saudi Arabia also burns more crude to generate power heading into the summer months. Direct use of crude last year rose from around 350,000 bpd in March to nearly 900,000 bpd in July, according to the JODI data.
MGL: The Societe General analyst is correct, its exports that really matter, but nonetheless we can infer that exports must be in the order of 7.5-8mbpd on this output data. Now much of this production appears to have headed directly into storage. There's precious little evidence we've seen so far of a MEANINGFUL rise in end demand. Yes its up some, but nowhere near the levels the market seem to be inferring.
Again, and we must reiterate, the market seems to have entirely missed the consequences of the Saudi dash for gas, which is adding 15bcf per day of production over two years, and will entirely replace domestic oil use for electricity, as well as generating a substantial stream of LPG and condensate from the 'wet' titre of production. Please note that ARAMCO has ceased to publish the light production data entirely, but just because we don't have the numbers does not mean it is not there!
Royal Dutch Shell says it has agreed to buy oil and gas exploration firm BG Group in a deal that values the business at £47bn.
The two firms say they have reached agreement on a cash and shares offer which gives investors a 50% premium on BG Group's share price on 7 April.
The deal could be one of the biggest of 2015 and is also the first big merger between energy companies in a decade.
It could produce a company with value of more than £200bn ($296bn).
Shell's £177bn market capitalisation dwarfs that of BG, which now stands at £31bn after a 20% fall in its share price over the past year.
BG Group is the UK's third largest energy company. It was created in 1997 when British Gas demerged into two separate companies: BG Group and Centrica.
Shell said BG Group shareholders would enjoy higher dividends, as it confirmed its intention to pay its existing shareholders $1.88 per ordinary share this year.
The oil giant also said it expected to commence a share buyback programme in 2017 of at least $25bn.
The deal comes at a time of uncertainty for oil and gas companies. In the past six months the price of oil has fallen by about 50%. Meanwhile, analysts have warned that investment in North Sea oil exploration has all but dried up, threatening the entire industry.
MGL: Takeout is at 46x eps, 12x ev/ebitda. Its nearly 3x the NPV at $95 Oil/$3 gas. Equates to $18 a reserve boee. What is Shell thinking?
Obvious: Shell bulks up and consolidates LNG industry. Secures an outlet for its large Australian gas supply that is currently lacking an LNG port. Can cut a bevy of costs, and presumably secure bigger discounts for its capex projects. Secures some nice equity in Brazilian sub-salt at a time when the entire Petrobras scandal may actually lead to some positive change in Brazilian Oil politics.
Not so obvious: Does Shell gain a CEO candidate with serious credentials? Helge Lund did by far the best job of the EU majors in the shale. He knows the offshore intimately. Shell needs a vigorous outsider to shake up its internal bureaucracy to the core. If Helge Lund stays at Shell, we may have to seriously rethink our disparaging remarks towards the group.
At the end of the day, Shell is buying what it failed miserably to find. A decent size pot of discoveries.
As previously reported the EIA, the IEA and the media have been understating demand and overstating “estimated” production. Today the EIA capitulated, finally exposing the game that has been occurring for 6 months now. They lowered 2015/2016 crude oil production growth to 550,000 B/D and 80,000 B/D respectively from 700,000 B/D and 140,000 B/D. This is a whopping reduction of 21% and 42% respectively when investors were led to believe that Cushing was filling fast and the glut would continue ad infinitum!
On the flip side the EIA has now “created” the overhang issue tied to Iran in 2016 saying that Brent prices may get reduced $5-$15 in 2016 if sanctions are lifted. To reiterate even if Iraq increases exports by 1M barrels demand will and has increased 1 million B/D. How many negatives to do we have to hear only to get dispelled and lose faith in the institutions that are supposedly providing unbiased research?
Here's US gasoline sales. You can see the big lift as prices tumble and that $50 credit card fill at the pump buys 30% more volume. Then it starts to fade. Your tank is full, you cant buy more!
We simply dont know yet what core real end demand is actually doing, and we wont for some considerable time. There's likely a lift, yes, but we doubt its that large. Its certainly not the near 30% lift implied in this data!
Nevertheless, the data is coming down, and the market wants to open the champagne.
The drop in oil prices and the sanctions on Russia could be taking its first victim.
According to sources, Russian company Rosneft could be forced to delay the development of its Far East LNG plant on Sakhalin island for two years at least, Reuters reports.
Rosneft’s Sakhalin plant was scheduled to start production in 2018, with an output of 5 mtpa, after it signed the agreement with ExxonMobil in 2013.
As an unnamed source revealed, the project could be delayed for three to five years due to falling oil price and lack of funds, although the company’s spokesman said no changes have been made to the project’s timeline.
Petrobras to halt 5 drill rigs under contract with Schahin
Brazil's state-run oil company Petroleo Brasileiro SA said on Monday it would halt five drilling rigs under contract with Schahin.
Petrobras, as the company is known, said it was informed by Schahin on April 2 that the financially strapped oil services company was planning a controlled shutdown of drilling activities at five of its rigs.
Schahin debt has come under pressure after unconfirmed media reports said the company was close to filing for bankruptcy protection and that it was being sued by its creditors for unpaid notes.
Halliburton to put drilling business units up for sale
Halliburton says it plans to hawk three business units as it works to persuade antitrust regulators to clear its $34.6 billion deal to buy smaller rival Baker Hughes.
The Houston oil field services firm said Tuesday it is putting its fixed cutter bits and roller cone drill bits, directional drilling, and logging-while-drilling and measurement-while-drilling businesses on the auction block in separate deals.
The transactions are expected to be finalized after federal trustbusters approve the Baker Hughes deal, which will tie up the world’s second and third-largest oil equipment suppliers, likely in the second half of 2015.
“We believe the value inherent in these businesses will be recognized by prospective buyers,” Halliburton CEO Dave Lesar said in a written statement, noting the firm “would prefer to retain these assets” if it wasn’t required by regulators to divest assets in certain oil tool markets.
US oil output is falling! Or maybe not - market's data quandary
The immediate outlook for U.S. oil production has rarely been more important for the financial world, with traders scrutinizing every scrap of data for signs of a sustained pull-back in output. It has also rarely been harder to predict.
Until late last year, a handful of energy analytics firms had honed the art of real-time oil production forecasts to a near science, running reams of information through complex models that account for everything from a well's production curve to weather patterns. With the price slump, however, these firms are struggling to keep up with the rapid pace of change.
"Things were much more straightforward at $100," says Bentek Energy analysis manager Anthony Starkey, whose Colorado-based firm publishes end-of-month production data, one of several closely monitored private reports.
Last week's U.S. government data showing a marginal drop in weekly output was a case in point. Some thought it marked a turning point and crude prices rallied more than $1 right after the data, despite an otherwise bearish rise in crude stocks.
The problem is the figure is not what it might seem to be. Rather than a survey-based data like most other weekly government statistics, the number is an estimate based on weekly production in Alaska and U.S. Energy Information Agency's month-old forecasts, according to the agency's methodology.
A comparison of EIA's weekly production figures for December and the monthly figure based on state data published two months later, underscores the risk of taking the weekly numbers at face value.
While the weekly numbers never exceeded 9.13 million barrels per day, the monthly number came in at 9.3 million. The latest weekly estimate is due on April 8.
State well production statistics are the industry standard, but they vary widely in terms of timeliness and detail. Some states such as North Dakota and Texas release the information within about two months, others, such as Ohio do so once a year.
Energy analytics firms are deploying cameras on pipelines, using natural gas flows to help predict crude output and relying on new algorithms that take into account production potential.
The techniques can work remarkably well when producers follow established patterns. Things get tricky though, when they scramble to keep up with tumbling crude prices that have fallen about 60 percent since June 2014.
Drillinginfo Inc., of Austin, Texas, for example, has recently began producing its own monthly index for "new production capacity," representing the likely future output and based on a model that uses everything from daily rig information to well types and production curve data.
Given that most shale wells begin pumping only about five months after they were drilled, the index has effectively served as a pretty accurate five-month leading indicator, according to co-founder and chief executive Allen Gilmer.
"If you did a backward comparison, the index is within a percent," he said.
But that time lag is getting longer and much less predictable, as more oil companies opt to leave new wells idle to await a recovery in prices, making calculating output harder. The share of wells that start pumping oil within five months has fallen to 72 percent from 78 percent a year ago, Gilmer says.
Gilmer says their suggests U.S. production will peak in May and then enter a five-month decline.
MGL: The fracklog is throwing every 'normal' number to the wind. EIA, for example, uses rig data to estimate output, and must be thinking some now about completions, or the lack of them. State well completion data that we've seen suggests the fracklog is now sizeable, we threw a 1mbpd number at you for 'fun', but frankly it could be anywhere between 500kbpd and 1.5mbpd.
December data just begins our confusion, December was the first month we saw some delayed completion activity, by March the anecdotal number was '85%' of well completions. Canadian pipeline completions add to the headache, bringing 600kbpd of heavy oil down to PADD3 for the first time, and last year almost no Canadian crude made it to Houston.
The market will likely react to the EIA data, its official, its easy to understand, and implicitly contains the fracklog.
We think the reality is as follows:
1> US Oil production likely peaked in q1, but you have to respect that enormous overhang from the fracklog. Knowing the companies, they wont want to liquidate that Fracklog under $80, because thats the price at which current sunk costs are recovered with return.
2> There's still too much oil even if you assume US output has peaked. Inventory gains almost every week tell their own story.
3> The market is gagging for good news, investors of every stripe are just dying for an excuse to buy the equity. There is so little commentary on the Saudi ''line in the sand'' at $60, it is almost frightening. This oil investment crowd behaviour looks simply delusional.
If Oil follows the pattern of the iron ore, and coal bear markets it is not going to be easy to dissipate this bullish behaviour in the face of horrible news flows. Shell's purchase of BG this am will cause some frothing at the mouth too, but the fact remains Shell is buying BG at a price equal to where BG traded 1 year ago.
Long-beleaguered energy stock bulls got a boost from Monday’s surge in crude oil prices, sending oil-related shares sharply higher. For chart watchers, today’s move is less of a surprise: Green shoots have been popping up in the sector for weeks. Specifically, oil and gas exploration and production stocks have built nice bases on the charts and some sport actual technical breakouts.
To be sure, this is a far cry from a bull market. That said, every bull market has to start somewhere, and there are plenty of technical signs to argue at least that the bear is over.
The SPDR Oil & Gas Exploration & Production exchange-traded fund (ticker: XOP ) set its low-water mark in December, and since then has formed a series of higher highs and higher lows (see Chart 1).
MGL: Struggling here to buy this breakout. Maybe we're obsessed with Saudi, but we just don't see that big V in Oil. Without Oil prices at $70+ or a radical transformation in the shale economics, ie service costs down 50% or more, this is a hope move, and not investable.
Moody's: Liquefied natural gas projects nixed amid lower oil prices
Liquefied natural gas (LNG) suppliers are curtailing their capital budgets, amid low oil prices and a coming glut of new LNG supply from Australia and the US, Moody's Investors Service says in a new report, "Lower Oil Prices Cause Suppliers of Liquefied Natural Gas to Nix Projects."
Moody's says low LNG prices will result in the cancellation of the vast majority of the nearly 30 liquefaction projects currently proposed in the US, 18 in western Canada, and four in eastern Canada.
"The drop in international oil prices relative to US natural gas prices has wiped out the price advantage US LNG projects, reversing the wide differentials of the past four years that led Asian buyers to demand more Henry Hub-linked contracts for their LNG portfolios," says Moody's Senior Vice President Mihoko Manabe.
However, projects already under construction will continue as planned, which will lead to excess liquefaction capacity over the rest of this decade. Notably, through 2017, Australia will see new capacity come online from roughly $180 billion in investments, which will result in a 25% increase in global liquefaction capacity. Likewise, the US is poised to become a net LNG exporter after the Sabine Pass Liquefaction LLC (Ba3 stable) project goes into service in the fourth quarter of 2015.
Moody's expects Cheniere Energy's Corpus Christi project will be the likeliest project to move forward this year, since it is among the very few projects in advanced development that have secured sufficient commercial or financial backing to begin construction.
Lower oil prices will result in the deferral or cancellation of most other projects, especially this year. While some companies like Exxon Mobil Corp. (Aaa stable) can afford to be patient and wait several years until markets are more favorable, most other LNG sponsors have far less financial wherewithal, and some may be more eager to capitalize on the billions of dollars of upfront investments they have made already, sooner rather than later.
There's substantial inertia involved in many of these projects. They are still low cost, still profitable and still eminently financeable for the mainly utility owners. Strategic buyers like the EU utilities, and Japanese utilities still want a source of secure, low risk supply.
Nevertheless, we agree, that much of the announced capacity will simply die before FID.
New aluminium battery for smartphones can be charged in a minute
New aluminium battery for smartphones can be charged in a minute
U.S. scientists said they have invented a cheap, long-lasting and flexible battery made of aluminium for use in smartphones that can be charged in as little as one minute.
The researchers, who detailed their discovery in the journal Nature, said the new aluminium-ion battery has the potential to replace lithium-ion batteries, used in millions oflaptops and mobile phones.
Besides recharging much faster, the new aluminium battery is safer than existing lithium-ion batteries, which occasionally burst into flames, they added.
Researchers have long tried but failed to develop a battery made of aluminium, a lightweight and relatively inexpensive metal that has high charging capacity.
A team led by chemistry professor Hongjie Dai at Stanford University in California made a breakthrough by accidentally discovering that graphite made a good partner to aluminium, Stanford said in a statement.
In a prototype, aluminium was used to make the negatively-charged anode while graphite provided material for the positively charged cathode.
A prototype aluminium battery recharged in one minute, the scientists said.
"Lithium-ion batteries can be a fire hazard," said Dai. "Our new battery won't catch fire, even if you drill through it."
The new battery is also very durable and flexible, the scientists said.
While lithium-ion batteries last about 1,000 cycles, the new aluminium battery was able to continue after more than 7,500 cycles without loss of capacity. It also can be bent or folded.
Larger aluminium batteries could also be used to store renewable energy on the electrical grid, Dai said.
NOAA points out that this is a weak event and that it is likely to remain weak and that it is unlikely to have a significant impact on weather and climate.
The long awaited El Niño Pacific Ocean warming event has finally arrived, according to forecasters from the National Oceanic and Atmospheric Administration (NOAA) of the US.
NOAA has updated its alert status for the so called El Niño Southern Oscillation (ENSO) to El Niño Advisory which is issued when El Niño conditions are observed and expected to continue.
Pacific Ocean sea surface temperatures (SSTs) have been elevated for a year or so but the scale and nature of the warming has, until now, failed to achieve a sustainable El Niño - in particular the necessary interaction between the atmosphere and the ocean has been lacking.
Earlier this week Australia's Bureau of Meteorology said that it thought the chances of an El Niño occurring had increased but it did not state that an event was in progress.
NOAA is basing its assessment that an El Niño is happening on the persistent observations of above-average sea surface temperatures (SSTs) across the western and central equatorial Pacific Ocean and a consistent pattern of sea level pressure.
MGL: NOAA is like the boy who shouts "Wolf!"; the first time you here it, its interesting, but after the nth time the reaction is subdued. NOAA spent the entirety of last year saying El Nino was likely and it never happened. The advisory says "50-60%" chance, and the Australians are much more sanguine.
Alrosa is quietly reporting a 16% decline in price per carat for gem quality. Alrosa's sales mix is reputed to be tilted towards small 1 carat - 2 carat gems. If so they are particularly exposed to the burgeoning industrial manufacture of gem quality stones that is now reaching the high street in some quantity.
Recently I took a diamond geologist to Oxford street and showed him the various retail offerings of gem quality stones. He inspected them at length, and first suggested to me that they could not be diamond, must be glass. He was visibly in shock, and peppered me with any number of questions, to which I frankly admit I did not have good answers.
I think the low end of the diamond market is being hit with these stones, and producers like Alrosa may be feeling the pain.
Australian gold miner Evolution Mining has repaid some A$35-million in debt during the March quarter, reducing its total debt by around 28%, to A$91.8-million.
The miner told shareholders on Wednesday that cash balance at the end of the March quarter was reported at A$32.5-million, after accounting for the voluntary debt repayment, a A$5.6-million dividend payment and a A$1.2-million once-off debt refinance establishment fee.
The debt was repaid on the back of continued strong cash generation, with Evolution producing some 103 305 oz of gold during the quarter. “This is an outstanding result with almost A$27-million dollars of free cash flow generated during the quarter, by far our best quarter to date,” said chairperson Jake Klein. “This has been achieved despite group gold production being around 9% lower than the previous quarter and is a great reflection of the successful inroads our staff continue to make in reducing costs and improving operational efficiency.” Klein noted that with gold now trading close to A$1 600/oz, Evolution was optimistic about the company’s future.
Chile, the world’s largest copper producer and exporter, will mine this year less of the red metal than previously anticipated, with estimations dropping from 6.0 million to 5.94 million tonnes, the state copper commission Cochilco said.
While the recent floods weighted on the forecast changes, they were mostly triggered by a lower estimate from projects run by Anglo American and at the Zaldivar mine, operated by Barrick Gold
In its annual global trends report released Tuesday, the authority said that while the recent floods weighted on the forecast changes, they were mostly triggered by a lower estimate from projects run by Anglo American and at the Zaldivar mine, operated by Barrick Gold, El Mercurio reports (in Spanish).
"There is an effect, albeit of low significance, from operations temporarily halted (mostly Codelco's Salvador and JX Nippon's Caserones) due to the heavy rains," the commission noted.
In terms of prices, Cochilco said it sees the red metal averaging $2.85 a pound this year, losing a bit in 2016 to settle at to $2.80.
Global copper production has been affected by several unforeseen events in the last few weeks. Before Chile’s torrential rains and floods workers in Indonesia blocked roads over a pay dispute, forcing the world’s second largest copper mine to halt production for five days.
London-listed Antofagasta Plc had to slash its copper-output forecast for Los Pelambres copper mine, its biggest operation in Chile, by around 5,000 tonnes last month. The announcement was followed by a court decision to force the company destroy a giant dam it constructed for the same mine.
Meanwhile, BHP Billiton recently revised down its 2015 forecasts for output from Escondida, the world’s largest copper mine, due to decreasing ore quality.
World No. 1 copper miner Codelco suspended mining operations at its Chuquicamata, Ministro Hales, Radomiro Tomic, Gabriela Mistral, and Salvador deposits due to the state of roads and mine access following the rains, the state-run firm said on Wednesday.
Other mines affected by the rains include Antofagasta's Michilla mine and Centinela copper complex, Anglo American PLC's Mantoverde and Lundin Mining Corp's Candelaria.
In most, if not all cases, mines have been closed since March 26, the main issue is that the roads, infrastructure, and cities nearby are now a disaster area. (The pictures, above, tell the tale.) There have been few, if any reports of actual mine damage.
Cochilco's estimate is total disruption of 1%, or 60k mt. Thats 2 weeks production for Chile, but 6-8 weeks in the effected areas?
Canadian seafloor miner Nautilus Minerals said Tuesday it has struck a deal with provider Gardline CGG, which will allow the company resume exploration around Solomon Islands, east of Papua New Guinea (PNG), where it is developing a gold, copper and silver underwater mine.
The goal is to expand Nautilus’ Seafloor Massive Sulphide prospect inventory by applying high tech exploration techniques the firm has been refining since 2006.
The company’s CEO, Mike Johnston, said the goal is to expand Nautilus’ Seafloor Massive Sulphide prospect inventory by applying high tech exploration techniques the firm has been refining since 2006.
Gardline CGG will supply a vessel, the MV Duke, equipped with a hull mounted Kongsberg EM302 multibeam system, a state of the art seafloor mapping system that provides some of the highest quality seafloor mapping data available, according to Nautilus.
The deep sea miner settled a key dispute with the PNG’s government last year, and since then, progress has moved quickly on the Solwara 1 project. The company expects to have all its undersea mining tools ready to go by the middle of next year.
It has also entered a charter agreement for a massive mining vessel, which it expects to receive in late 2017. After that, Nautilus expects to start digging up copper and precious metals almost right away.
MGL: We continue to watch Nautilus, not because we're fans of the equity, (too difficult!), but because Nautilus may be the start of something really interesting: a strategic move by the worlds big miners offshore. Its happened in Oil, and Diamonds. Where it to happen in base metals, it would radically alter our thinking about the ultimate availability of metal. Onshore deposits, after all, are seeing declining grades, increased capex per tonne mined, and smaller sizes of discoveries.
MGL: Rusal's debt position, whilst onerous, is not parlous, and its largely self inflicted by the CEO's determination to own a chunk of Norilske. Rusal has $1bn in free cash flow, so it can easily finance its current $9bn odd debt load. Cynically, we've regarded Rusal's position as oddly defensive, there's no spare cash for the Kremlin to raid, and no spare balance sheet strength for Kremlin inspired antics, like, for example a Mechel rescue.
China, the world’s largest buyer of seaborne iron ore, may introduce a nationwide subsidy for local producers of the steel-making commodity amid slumping prices, according to the official Shanghai Securities News.
A plan for the proposed subsidy is in the final stages of being drafted and it could start as soon as the middle of this month, the newspaper reported on Wednesday, citing people in the industry that it didn’t identify.
Benchmark iron ore prices sank below $50 a metric ton to a 10-year low last week as surging low-cost supplies from the world’s biggest mining companies including BHP Billiton Ltd. boosted a worldwide surplus as Chinese demand faltered. The rout has left higher-cost producers in China and overseas making losses, threatening mine closures and redundancies. Low-grade operations in China’s Hebei province are among the most exposed suppliers, Morgan Stanley said in a March 24 report.
“The subsidies, if implemented, will sustain domestic production, increase the global supply of iron ore and result in prices slumping further,” Wu Zhili, an analyst at Shenhua Futures Co. in Shenzhen, told Bloomberg by phone on Wednesday, commenting on the newspaper’s report. Domestic mines account for about 20 percent of China’s iron ore demand, according to Wu.
Two versions of the subsidy are under consideration, the report said. Payments may be pegged to the grade of the ore, with producers of lower-quality output receiving bigger payments, or there may be figure of 6 yuan ($1) a ton, it said.
As China’s steel demand drops this year, cuts to output will increase, reducing demand for iron ore, the China Iron & Steel Association said in a monthly statement on Tuesday. Iron ore prices won’t rebound as the oversupply will persist, according to the association.
China’s apparent steel demand fell about 5 percent in the past six months from a year earlier, the biggest drop since the global financial crisis, Goldman Sachs Group Inc. said in a report on April 6. Global iron ore consumption will contract this year, according to Deutsche Bank AG.
MGL: Nasty if true. If so, its clearly Beijing swinging into action to prevent social unrest, and sustain employment in areas, like Hebei already severely stressed by new pollution controls and the likely contraction in steel capacity.
A $1 a mt is not really enough to make much difference in the current iron ore market.
China's steel production slips in the first two months
In the first two months, the total output of crude steel slipped 1.5 percent from the same period last year to 130.53 million tonnes, while the profit of the iron and steel industry plunged 45.2 percent year on year to 9.03 billion yuan, according to the statement.
The output fluctuations came amid China's efforts to tackle overcapacity, which has plagued China since the 2008 financial crisis.
The Ministry of Industry and Information Technology said last month it will accelerate the overhaul of its overly-invested iron and steel sector to bring it back to a "basically balanced level" by 2017.
Spring in China heralds better steel market expectations
Spring in China heralds better steel market expectations
China's steel market outlook for April remains similar to March, underpinned by expectations of stronger construction activity in spring time, according to the latest Platts China Steel Sentiment Index (CSSI).
CSSI in April showed a headline reading of 74.7 out of a possible 100 points, rising from 72.2 in the previous month, and was the highest reading since March last year.
The CSSI reflects expectations of market participants for the current month.
A CSSI reading above 50 indicates an expansion and a reading below 50 indicates a contraction.
"The latest CSSI shows the seasonal aspect of China's steel market as March and April in both 2014 and 2015 were by far the strongest months in terms of expectations of new orders," said Paul Bartholomew, a Platts analyst on steel and steel raw materials.
"With Chinese New Year and the coldest winter months now out of the way, construction activity is expected to resume and help drive demand for steel. There has been greater emphasis on domestic demand for steel in the past two months rather than exports, which China relied on heavily last year."
There was a big change in the outlook for steel inventories, with most industry participants expecting steel inventories to start declining after staying high for much of this year.
MGL: Chinese traders may be commenting more on the political landscape than the economic landscape here. If Beijing's crackdown has run its course, and that's possible, we may see some kind of normality return to steel and iron ore in China.
Only this time it's Beijing's version of normal. Not the '7% forever' China-holics.
Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority
The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only.
Officers and employees, including persons involved in the preparation or issuance of this material may from time to time have “long” or “short” positions in the securities of companies mentioned herein. No part of this material may be redistributed without the prior written consent of Commodity Intelligence LLP.