China’s crude steel output climbed in May as the world’s biggest producer continues to churn out supply in defiance of complaints that it’s swamping the world market, said a Bloomberg report.

Output rose to 70.5 million metric tonnes, up 1.8 per cent from a year earlier and 1.6 per cent higher than April, the National Bureau of Statistics said Monday. The figure is just below March’s record 70.65 million tonnes and brings the total for the first five months to 330 million tonnes, down 1.4 per cent on year. China accounts for about half of global supply for the metal used in everything from cars to skyscrapers.

Steel prices in China flipped from bull to bear market in May following a 29 per cent slump in the Shanghai benchmark for reinforcement bar from its April high. The collapse came after regulators and exchanges stepped in to cool excessive speculation and supply expanded as mills fired up capacity to capture thicker margins.

“Some mills have just brought back idled capacity into production in May so they won’t be able to dial back immediately,” Lv Xiaohua, an analyst at BOCI Futures Co, said by phone from Shanghai before the data were released. “Output will remain at elevated levels for some time as long as mills have positive cash flow.”

Trade Barriers

China’s fading infrastructure boom has left it saddled with too much capacity after decades of rapid growth. While production last year shrank for the first time since 1981 as demand contracted, supply still far outstrips domestic needs. The nation is exporting its surplus at record rates, drawing the ire of international rivals.

Competitors from India to the European Union have raised trade barriers and in recent weeks China’s industrial overcapacity has been singled out as a global problem and provoked criticism from Japan’s Prime Minister Shinzo Abe and US Treasury Secretary Jacob J Lew.

For its part, China has pledged to reduce capacity by as much as 150 million tonnes through 2020. Li Xinchuang, deputy secretary-general of the China Iron & Steel Association, has said the nation won’t waver in executing the cuts but that exports will likely stay high for years as local demand shrinks.

China’s aluminium production rose to 2.68 million tonnes last month from 2.57 million tonnes in April, and 2.67 million tonnes a year ago, according to the data. Output declined 1.7 per cent in the first five months to 12.62 million tonnes.

Chinese smelters, which had pledged to slash production to bolster prices, are bringing back idled capacity after prices rebounded this year. With most producers in the world’s largest supplier enjoying solid margins, output growth will accelerate to 4 per cent year-on-year in the second half, Goldman Sachs Group Inc said in a report earlier this month.