Global Steel Production (Nov.) - Capital Economics
Metals

Global Steel Production (Nov.)

Metals Data Response
Written by Samuel Burman
Cancel X

Growth in global steel production fell in November, in part because cold weather in China weighed on construction activity there. Nevertheless, we expect global output to remain high in 2021 as elevated prices have boosted mill profitability.

China steel production to bounce back soon

  • Growth in global steel production fell in November, in part because cold weather in China weighed on construction activity there. Nevertheless, we expect global output to remain high in 2021 as elevated prices have boosted mill profitability.
  • According to the World Steel Association (WSA), global steel production rose by 6.6% y/y last month (see Chart 1), down slightly from 7.0% in October. That said, daily global production ticked up by 0.15% m/m. (November has fewer days than October.)
  • Steel production growth in China continued to expand rapidly in November in y/y terms (see Table 1), although daily production was down almost 2% m/m. Much of the decline can be attributed to a combination of environment-related cuts to output in winter, seasonally weak demand in the construction sector and higher steel production costs. Abnormally cold weather in recent weeks has delayed some construction projects. Meanwhile, heightened tensions between China and Australia have boosted the price of coking coal in China. (See our Energy Update.) Nevertheless, we think that the recent surge in domestic steel prices will incentivise output, assuming that temperatures increase.
  • Meanwhile, production in Europe surged in y/y terms last month, led by robust growth in Germany. That said, we think that the re-introduction of national lockdowns as well as higher electricity costs will weigh on consumption and production growth in early 2021. Elsewhere, output in Turkey also rose strongly but production there is likely to fall in 2021. China has pledged to implement new scrap import standards which, if enacted, would divert scrap into China at the expense of Turkey. What’s more, the US and EU could impose new sanctions on Turkish entities, which could hamper steel exports.
  • All in all, production growth in China has slowed recently but it should recover soon, which would keep global production high and should eventually act as a lid on prices.

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

Sources: World Steel Association, Capital Economics

Table : Steel Production

US

India

China

Japan

Europe

World

Nov. 2020 (Mn. Tonnes)

6.1

9.2

87.7

7.3

15.8

158.3

% y/y change

-13.7

3.5

8.0

-5.9

8.2

6.6

Jan. – Nov. 2020 (Mn. Tonnes)

66.1

89.4

963.2

75.7

154.4

1672.4

% y/y change

-17.9

-12.3

5.9

-17.3

-10.4

-1.0

Sources: World Steel Association, Capital Economics


Samuel Burman, Assistant Commodities Economist, samuel.burman@capitaleconomics.com