Business experts conversant with Chinese steel industry have revealed that the Chinese steel production dropped by 8.1% last month.

According to these experts the drop in production puts the industry on track for the lowest annual total this decade as mills adjust to much weaker demand.

Figures indicate that crude steel output fell 8.1% from June to 76.93 million metric tons.

July output was also 3.6% lower than a year earlier, the weakest July since 2017 and the weakest month since December according to experts.

The steel market is contending with major structural headwinds.

The government seems willing to tolerate slower economic growth, while the crisis in the country’s property market shows few signs of abating.

The drop in production is attributed to weaker domestic demand and higher cost pressures offset continued support from strong overseas demand for Chinese goods.

Higher costs are linked to disruptions in global energy and shipping markets also added to the pressure on producers.

Meanwhile, last year China’s actual crude steel production dropped to 960.81 million tons (a 4.4% year-on-year decrease to a seven-year low), operating within a total estimated structural capacity ceiling hovering around 1.1 to 1.2 billion tons, which the government actively sought to curb and regulate due to persistent oversupply.

China is the world’s biggest steel producer, and the metal is a core input for construction and manufacturing.