Global Steel Production (Sep.) - Capital Economics
Metals

Global Steel Production (Sep.)

Metals Data Response
Written by Caroline Bain
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Growth in global steel production accelerated in September. However, all the growth was in China’s output. It looks increasingly likely that a revival in production elsewhere will have to wait until 2021.

China to remain the only bright spot for some time

  • Growth in global steel production accelerated in September. However, all the growth was in China’s output. It looks increasingly likely that a revival in production elsewhere will have to wait until 2021.
  • According to the World Steel Association (WSA), global steel production rose by 2.9% y/y in September (see Chart 1), although it is still down by 3.2% y/y year-to-date. (See Table 1.) As has been the case for some time, almost all of the growth in steel production last month was in China.
  • China’s steel output was up by a stellar 10.9% y/y in September. Growth in demand has been strong owing to infrastructure spending by provincial governments and the more general revival in economic activity. However, demand growth may ease back from here as the government has tightened lending conditions for property developers. That said, it appears that the winter output restrictions (to curb pollution) are going to be less severe this year (than last year), which suggests that steel output will remain high.
  • Elsewhere, India’s output still contracted in year-on-year terms. But the decline was much smaller than earlier in the year as mills appear to be steadily raising output. Reportedly, the Indian industry co-ordinated output cuts in Q2 amid the slump in domestic demand. Steel mills have subsequently tried to capitalise on their low-cost capacity to boost exports, but global demand remains subdued.
  • In contrast, US production is picking up only very slowly. A number of blast furnaces were shuttered in Q2, as demand tanked, and they are only gradually being restarted. Output was still 19% lower y/y in September and the American Iron & Steel Institute reported that production was down by 15% y/y in the third week of October. It now looks likely that US output will fall by 15-20% this year.
  • And finally, Japan’s output is down by nearly 20% so far this year and is unlikely to pick up before 2021. JFE and Nippon steel closed furnaces in April and have said that they will not reopen them in 2020.

Chart : Steel Production (y/y % Change)

Sources: World Steel Association, Capital Economics

Table : Steel Production

US

India

China

Japan

Europe

World

Sep. 2020 (Mn. Tonnes)

5.7

8.5

92.6

6.5

14.1

156.4

% y/y change

-18.5

-2.9

10.9

-19.3

-8.0

2.9

Jan. – Sep. 2020 (Mn. Tonnes)

53.1

69.6

783.3

61.2

122.3

1,346.1

% y/y change

-19.7

-17.2

4.8

-19.1

-13.9

-3.2

Sources: World Steel Association, Capital Economics


Caroline Bain, Chief Commodities Economist, caroline.bain@capitaleconomics.com