Global Steel Production (Jan.) - Capital Economics
Metals

Global Steel Production (Jan.)

Metals Data Response
Written by James O'Rourke
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Growth in global steel production slowed in January, as China’s output growth fell back. However, output ex-China picked up and we expect further gains in the coming months, not least because of the low base a year earlier.

Steel output outside China to revive further in coming months

  • Growth in global steel production slowed in January, as China’s output growth fell back. However, output ex-China picked up and we expect further gains in the coming months, not least because of the low base a year earlier.
  • According to the World Steel Association (WSA), global steel production rose by 4.8% y/y in January (see Chart 1), down from 5.8% in December. This marks the fourth consecutive monthly decline in the global growth rate, from 7.0% y/y in October, though production in levels terms is still extremely high.
  • China’s steel production growth rate declined from 7.7% y/y in December to 6.8% in January. Although it is too early to tell, China’s steel output growth has been falling steadily since October and we wouldn’t be surprised if it continues to ease back this year as demand falters. Indeed, we expect investment in the property sector to slow in the coming quarters, as property controls weigh on demand and access to credit is pared back. (See our China Chart Book.) What’s more, despite the increase in China’s steel price, ultra-high iron ore prices will probably also act as a headwind to steel output in the months ahead.
  • More notable was the renewed revival in production outside of China. Output increased m/m in the US, India, Japan and Europe, while production growth was particularly strong in India. (See Table 1.) This continues a general recovery in steel production outside China, in line with the wider rebound in the global economy. And given that the prices of steel in the US and Europe are at multi-year highs, output growth will continue to recover in the coming months.
  • All told, there are signs that China’s steel output growth is starting to ease back from its 2020 highs, and we suspect that this trend will continue, as property controls weigh on domestic steel demand.

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

Sources: World Steel Association, Capital Economics

Table 1: Steel Production

US

India

China

Japan

Europe

World

Jan. 2021 (Mn. Tonnes)

6.9

10.0

90.2

7.9

16.6

162.9

% y/y change

-9.9

7.6

6.8

-3.9

2.5

4.8

2020 (Mn. Tonnes)

72.7

99.6

1,054.4

83.2

169.4

1,828.0

% 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