Global Steel Production (Dec. and 2020) - Capital Economics
Metals

Global Steel Production (Dec. and 2020)

Metals Data Response
Written by James O'Rourke
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Growth in global steel production climbed in December, once again led by a rise in China’s output. We expect growth in China’s output to slow in 2021, while ex-China output should recover lost ground.

Slower production growth in China on the cards in 2021

  • Growth in global steel production climbed in December, once again led by a rise in China’s output. We expect growth in China’s output to slow in 2021, while ex-China output should recover lost ground.
  • According to the World Steel Association (WSA), global steel production rose by 5.8% y/y in December (see Chart 1), a slightly larger increase than the downwardly revised 5.7% in November. Nevertheless, as a result of the massive falls in output outside China earlier in the year, global steel production fell by 0.9% in the year as a whole.
  • Steel production in China rose again in December in y/y terms (see Table 1), and daily output was also up a tad m/m. In 2020, China was among the few major producers to increase production y/y, as government-led fiscal stimulus and an expansion of credit growth propped up steel demand. After all, China was also the only major economy to record positive GDP growth in 2020. That said, we expect China’s economic growth to slow in H2 2021 as the government gradually withdraws fiscal stimulus. At the same time, a crackdown on lending to the property sector will probably weigh on steel demand in the coming months. As such, steel production growth in China will probably be more limited this year.
  • Elsewhere, production finished the year around 9% lower y/y, though this was up from the nadir of around 14% in mid-2020. In Japan, the slump meant that output hit a 51-year low last year, declining by over 16% y/y, while output in the US was down by a similar amount. We expect ex-China output to continue recovering into 2021, as the global economy revives and as regional steel prices have rebounded.
  • In sum, production growth in China finished 2020 on a high. But falling credit growth and a slowdown in the pace of economic expansion in H2 should mean output growth there is more limited in 2021.

Chart 1: Steel Production (y/y % Change)

Sources: World Steel Association, Capital Economics

Table : Steel Production

US

India

China

Japan

Europe

World

Dec. 2020 (Mn. Tonnes)

6.4

9.8

91.3

7.5

14.7

160.9

% y/y change

-11.8

4.4

7.7

-3.3

11.7

5.8

2020 (Mn. Tonnes)

72.7

99.6

1054.4

83.2

169.4

1828.0

% y/y change

-17.2

-10.6

5.9

-16.2

-8.7

-0.9

Sources: World Steel Association, Capital Economics


James O’Rourke, Commodities Economist, +44 (0)20 3927 9834, james.orourke@capitaleconomics.com