China is virtually certain to meet its objective of keeping crude steel production to below 2020 levels, after producing just 2.31Mt per day in November.

Output fell to 69.3Mt, the sixth consecutive monthly fall and ~20% below the same month in 2020.

However, futures trading was up today amid expectations some restrictions will unwind with China’s efforts to keep production below 2020 levels appearing almost certain to be successful.

The world’s biggest steelmaker has now turned out in the order of 946Mt in 2021, suggesting it will still be a billion tonne market this year.

A number of iron ore miners fell into the red today. BHP (ASX:BHP) lost 1% despite getting ACCC approval for the merger of its petroleum business with Woodside.

Rio Tinto (ASX:RIO) was off 0.35%, MinRes (ASX:MIN) dropped 1.04%, Grange Resources (ASX:GRR) fell 1.5% and Champion Iron (ASX:CIA) copped a 6% shave. FMG (ASX:FMG) was up 0.86%.

Commbank’s Vivek Dhar said mill margins remained strong, suggesting underlying demand for steel was there.

“China’s steel output is on track to fall below 2020 levels this year – a remarkable outcome given the 12%/yr increase in China’s crude steel output in H1 2021,” he said.

“China’s daily crude steel output just needs to average 3.44Mt/day in December to meet policy objectives. That’s well above the 2.31Mt/day recorded last month.

“The rise in China’s steel mill margins suggests there is underlying pressure to boost steel output – once again indicating that the supply cuts have been more severe than any decline in demand.

“Steel demand from China’s property construction sector, which accounts for ~30% of China’s steel demand, was particularly weak and primarily reflects the default risks facing China’s property developers.

“Positively though, partial volume indicators of China’s property sector showed improvement last month, suggesting some hope that the worst of the decline in property construction is behind us.”

Uranium stocks Paladin Energy (ASX:PDN) and ERA (ASX:ERA) were the top mid cap performers, climbing 11.26% and 6.25%, respectively, while Western Areas (ASX:WSA) climbed 5.56% after it agreed to a $1.1 billion takeover from IGO (ASX:IGO).