Chinese steel production drops sharply at end-May

The latest steel production data has shown a sharp drop off in production rates at the end of May.  It seems that high stocks and faltering steel prices have finally undermined very strong production levels.

This provides a headwind for those looking for a bit of a bounce in iron ore prices on the basis that stocks are low.  Iron ore port inventories have dropped to low levels in terms of days of use, but these production rates are too high.  So the adjustment to better inventory ratios is not just in lifting the level of stock, but in lower rates of production.