[ferro-alloys.com]China dailycrude steel output rallied 2.7% from late July to stand at 2.14 million tonnes in the first ten days of Aug, rising above the mark of 2.1 million tonnes again after a sliding to 2.08 million tonnes in late July.

Impressive comeback has been catalyzed by improved demand from the industry and infrastructure resulting in destocking after nearly 2 years of sluggishness.

The comeback of output growth is expected to add to pressure on the supply side but Chinese social steel inventories have dropped for 21 weeks in a row, indicating smooth destocking and sound demand for the alloy. Meanwhile, steel stockpiles at CISA members fell 190,000 tonnes, or 1.5%, to 12.16 mln tonnes in early Aug, a second straight weekly drop.

China, as usual, produced the maximum quantity of steel in the world during July at 65.47 million tonnes jumping by 6.2% YoY. Chinese steel production is expected to touch 780 million tonnes this year growing by 9% over last year which is expected to translate to nearly 100 million tonnes of additional iron ore demand, outpacing analysts' estimated increase in global seaborne iron ore supply of 48 million to 65 million tonnes this year.

A rally in steel production is expected give traction toiron ore demand which has been on roller coaster ride climbing by nearly 29% since May touching USD 143 per tonne.

Floor space for newly started construction projects jumped 8.4 percent in January to July from a year earlier, compared with a 3.8 percent rise in the first six months and a decline in the first quarter, according to the National Bureau of Statistics.

Beijing's plan to boost investment in urban infrastructure and railways is also pushing steelmakers to keep output high.

Cumulatively the iron ore and steel market seems set for spirited run in H2. Overall improvement in global economy with USA and EU coming out of recession is a positive sign