China churned out a lot less steel in May compared to the previous year as mills responded to the government’s pledge to cut production.

It’s the first year-on-year contraction in the monthly figure since Beijing vowed to address the industry’s glut at its annual policy meeting in March, according to the statistics bureau on Monday. Production declined 6.9% to 86.55 million tons, pushing output 1.7% lower over the first five months.

It was also the weakest performance in seven years for May, a month that often marks a high-point in annual production.

Steelmakers are wrestling with a protracted slump in the property market, their chief source of demand, which is likely to worsen in the near term as construction activity enters its seasonal summer lull. The fallout from the trade war with the US is also weighing on prices.

Crude oil refining, another sector targeted by the government, dropped 1.8% last month as plants entered their peak maintenance period. More units were idled than last year due to the impact of an increasingly electrified economy on demand for fuels like diesel and gasoline.

The aluminum sector enjoyed better conditions, with output climbing 5% to a record 3.83 million tons in May as falling power costs boosted margins.

For fossil fuels, China continued to press ahead with its efforts to deliver energy security despite weak fuel and power markets and encroachment from renewables.

Natural gas output surged 9.1% in May, while coal increased 4.2% and oil rose 1.8%. Electricity production was more muted, adding just 0.5% from the previous year.

On the Wire

China’s domestic consumption surprisingly jumped as the economy rode out the tariff rollercoaster in May, offering a confidence boost to Beijing as it stares down the threat of a prolonged trade war with the US.

China’s desire to boost exports at a time of global trade turmoil means the yuan now looks set to weaken against most major currencies. One possible exception: the dollar.

In the first major US-China trade dispute of Trump’s second term, Beijing was able to use its control of rare earths to force Washington to a deal last week.

The trade agreement reached by US and China in London left export restrictions tied to national security unresolved, Reuters reported, citing two people familiar with the matter.

Chinese President Xi Jinping is heading to Kazakhstan for talks with Central Asian leaders, providing a counterpoint to a Group of Seven summit by visiting a vast region at the nexus of competing interests from Washington to Beijing.

Kazakhstan has selected Russia’s Rosatom to lead a consortium for the construction of its first nuclear power plant. China National Nuclear Corp. is expected to lead a group to build a second atomic facility.