Global Steel Production (Oct.) - Capital Economics
Metals

Global Steel Production (Oct.)

Metals Data Response
Written by Samuel Burman
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Despite the slight fall in China, global steel production continued to rise in October and will probably increase further in the year ahead providing that the rollout of COVID-19 vaccines is successful.

Vaccine rollout will boost global production

  • Despite the slight fall in China, global steel production continued to rise in October and will probably increase further in the year ahead providing that the rollout of COVID-19 vaccines is successful.
  • According to the World Steel Association (WSA), global steel production rose by 7.0% y/y in October (see Chart 1), albeit it was still down by around 2.0% year-to-date. (See Table 1.) However, unlike previous months, output in China fell m/m whereas production in the rest of the world increased.
  • Steel production in China dipped by 0.4% m/m in October, although it was still up strongly y/y. It could be that a combination of stricter lending criteria weighing on demand in the steel-intensive property sector and preparation for the winter capacity cuts (on environmental grounds) are acting as a disincentive to supply. Nevertheless, we think that production will remain high this winter, instead of falling sharply like last year, as many steel mills have completed environmental upgrades to satisfy pollution requirements. What’s more, the recent surge in domestic prices will also incentivise production.
  • Meanwhile, India’s output grew last month as a mild monsoon season meant that domestic demand held up and an apparent easing of logistical constraints has helped export sales revive. That said, output remains below pre-virus levels and will probably only fully recover once lockdown measures are completely lifted.
  • Finally, US production continued to tick up due to the ongoing recovery in economic activity, but also perhaps because of the recent trade restrictions imposed on imports from Brazil and Mexico. (See our Industrial Metals Update.) However, quarantine lockdown measures are likely to weigh on domestic consumption and production in the coming months.
  • All told, it seems that global production ex-China is rebounding, but we will probably have to wait until next year to see output outside of China fully return to 2019 levels.

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

Sources: World Steel Association, Capital Economics

Table 1: Steel Production

US

India

China

Japan

Europe

World

Oct. 2020 (Mn. Tonnes)

6.1

9.1

92.2

7.2

15.6

161.9

% y/y change

-15.3

0.9

12.7

-11.7

-0.2

7.0

Jan. – Oct. 2020 (Mn. Tonnes)

59.9

79.7

875.5

68.4

138.3

1512.3

% y/y change

-18.4

-14.4

5.6

-18.4

-12.3

-1.9

Sources: World Steel Association, Capital Economics


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