Worldsteel: Global steel production rises 1% year over year in October
Global crude steel production reached 152.1 million mt in October, rising 1% year over year and 5.9% from September, according to World Steel Association data published Nov. 22.
This brought total production for the first 10 months of 2024 to 1.5 billion mt, down 1.6% year over year.
China produced 81.9 million mt in October, increasing 2.9% from a year earlier and up 6.5% from September, accounting for 53.8% of the total global crude steel output.
This brought China’s January-October volume to 850.7 million mt, down 3% year over year.
The world’s second-largest steel producer India saw production edge up 1.7% year over year to 12.5 million mt in October, which was also up 6.8% month over month, the data showed.
India’s cumulative January-October output rose 5.6% to 123 million mt, according to worldsteel.
Japan’s October production was 6.9 million mt, down 7.8% year over year but up 4.5% from September, with January-October output down 3.7% year over year at 70.2 million mt.
US output in October was 6.6 million mt, down 2% year over year and down 1.5% month over month, taking January-October production to 66.7 million mt, down 1.9% from the previous year.
Russia was estimated to have produced 5.6 million mt in October, down 15.2% year over year and steady from September, bringing its estimated January-October output to 59.4 million mt, a decline of 6.8% from the previous year.
South Korea produced 5.4 million mt of crude steel in October, down 1.8% year over year and 1.8% from September, with the 10-month volume down 5.1% from the prior year at 53.1 million mt, the data showed.
Europe Jan-Oct output up 2.1%
Crude steel production in the EU rose 5.5% year over year and 6.2% month over month to 11.3 million mt in October, the data showed.
The EU’s January-October volume was 109.3 million mt, climbing 2.1% year over year.
Germany, the largest steel producer in Europe, saw its crude steel production rise 14.7% year over year to 3.2 million mt, which was also 7% higher from September.
Germany produced 31.6 million mt crude steel in January-October, up 5% year over year, the data showed.
Platts, part of S&P Global Commodity Insights, assessed Northwest European HRC at Eur560/mt ex-works Ruhr on Nov. 21, down 18% from the start of 2024.
Turkey produced 3 million mt of steel in October, up 0.7% year over year, brining the 10-month total to 30.9 million mt, rising 12.4% year over year.
Brazil’s October crude steel production also rose 16.2% year over year to 3.1 million mt, while Iran’s fell 1.9% year over year to 3 million mt.
Crude steel data covers the 71 countries that report to worldsteel, accounting for about 98% of global crude steel production.
October production of pig iron from 37 countries was 104.4 million mt, rising 0.2% year over year and 4.5% from September, the data showed, while direct-reduced iron produced from 13 countries amounted to 12.8 million mt, up 16.9% year over year and 19.9% higher than the previous month, the data showed.
High production weighs on Chinese steel market; market eyeing steel output cuts
China’s crude steel production remained high in July and is likely to inch higher in August, weighing on the steel market amid lackluster steel demand. However, some market sources say they believe China will gradually carry out steel production cuts over the next few months for annual steel output controls, thus limiting further room for downside movement in steel prices.
High production
China’s crude steel output in July was 11.5% higher year on year at 90.8 million mt, although daily output retreated 3.6% from June to 2.929 million mt, National Bureau of Statistics data showed Aug. 15.
China’s pig iron output in July rose 10.2% year on year to 77.6 million mt, while daily output fell 2.4% month on month to 2.503 million mt.
Over January-July, China’s crude steel and pig iron output increased by 2.5% and 3.5% year on year, respectively, to 626.51 million mt and 528.92 million mt.
Moreover, after steel output controls to reduce air pollution at Tangshan city, China’s biggest steelmaking hub, were lifted at the start of August, China’s pig iron and steel production this month is likely to increase again from July levels, some market sources said.
China Iron & Steel Association on Aug. 14 estimated China’s daily crude steel and pig iron output for Aug. 1-10 at 2.953 million mt and 2.533 million mt, respectively, up 0.8% and 1.1% from July’s average, and 9.1% and 10% higher year on year.
Finished steel inventories at mills and spot markets monitored by the China Steel Industry Association reached 25.69 million mt as of Aug. 10, up 7.5% from the end of July, but still 6% lower year on year.
In tandem with rebounding steel output and rising inventories, Chinese domestic rebar prices fell by Yuan 165/mt ($22.6/mt) from Aug. 1 to Yuan 3,691/mt on Aug. 14, S&P Global Commodity Insights data showed.
Steel output cuts
It remains unclear when Chinese mills will implement output cuts in order to keep the country’s annual crude steel within 2022 levels, which is partly the reason behind currently weak market.
But some mill sources in northern and eastern China told S&P Global that some major mills in these two regions have been or will be ordered verbally to cut their production later this year.
According to market sources, as of mid-August, China’s biggest steelmaker Baowu Group, as well as some major mills in Shandong province, have received verbal orders to keep their 2023 crude steel output within 2022 levels.
Meanwhile, market chatter suggested that Hebei and Jiangsu provinces, China’s leading and second-largest steelmaking hubs, respectively, will soon verbally inform major local mills to cut output.
Some sources said mills will only receive verbal orders to cut output directly from the local government, instead of formal announcements, and therefore it is difficult to foresee how much crude steel output in China will be reduced in the next few months.
“I think China’s steel production will slow down over September-December, which will almost certainly support the steel market by then …but sluggish steel demand may limit the upside room for steel prices,” one mill source said.
Bleak steel demand
The floor space of China’s new home construction starts, the most crucial steel demand driver, in July fell 30.2% month on month and 26.5% year on year, according to NBS data.
Over the first seven months of 2023, new home starts fell 24.5% year on year, and 52.1% from the same period of 2021.
The floor space of new home sales, a major channel to fund new projects, in July fell 46.1% month on month and 23.9% year on year. New home sales over January-July were down 6.5% year on year and 34.5% lower than in the same period of 2021.
As property sales still show no signs of bottoming out, some steel market sources predicted that new home starts and property-related steel demand would continue to decline in the foreseeable future.
China’s infrastructure investment in Jujly increased by 4.6% year on year, slowing from a 6.4% year-on-year increase in June. Infrastructure investment over January-July rose 6.8% year on year.
Some market sources said they expect China to step up policy support to the infrastructure sector for the remainder of 2023, but this is still unlikely to fully offset the falling steel demand in property-related sectors.
Austria’s June steel production rises on-year
Austria’s steelmakers decreased crude steel production in June compared to the previous month, according to worldsteel data.
Output amounted to 648,000 tonnes, down by 1.8% compared to May, but 2.7% more on-year, Kallanish notes.
In January-June, the country produced 3.78 million tonnes of steel, down 4% on-year.
In 2022, Austria reduced steel production by 4.7% on-year to 7.51mt.
Overall EU output in June fell by 11.1% on-year to 10.6mt. In January-June, EU steelmakers produced 66.3mt, down 10.9% on-year.
Austria’s largest steelmaker voestalpine expects good earnings after a strong 2022/23 fiscal year (see Kallanish passim). It recorded the highest level of revenue and best operating result in its history, surpassing even its record year of 2021/22. The Austrian group’s revenue rose by 22.1% over the previous year to €18.2 billion ($19.2 billion), and Ebitda from €2.3 billion to €2.5 billion.
The firm said in June expectations were more cautious because of the war in Ukraine, among other geopolitical tensions worldwide, and inflation in both Europe and North America turning out to be more persistent than expected. Still, the company expects Ebitda to reach €1.7-1.9 billion in the current fiscal year.
Earlier, voestalpine approved an investment of around €1.5 billion for the construction of one electric arc furnace at each of its two sites in Austria – Linz and Donawitz. These will ultimately replace two blast furnaces by 2027.
Svetoslav Abrossimov Bulgaria
