The aggregate crude steel production of 64 countries stood at 167.90 million tonnes (mn t) in June’21, as per data released by the World Steel Association (worldsteel).
The output volume increased by 11.6% against 150.45 mn t a year ago. Recovery in most of the global economies in CY’21 and the global spread of Covid-19 during Mar-June’20 with stringent lockdowns is relatable to this increase.
In Jan-June’21, the accumulative output stood at 1,003.90 mn t, up 14.4% y-o-y.
SteelMint analyses production of the top three steel producing nations:
1. China’s crude steel output up 6.6%: China’s steel output stood at 93.90 mn t in June’21, up by a mere 1.5% against 92.51 mn t in the corresponding period last year (CPLY). There were several factors that restrained growth in China’s steel production.
- Production cuts: The government’s prime focus on improving air quality has largely impacted production volumes in both years. However, continual extension of production curbs after Sept’20 played a major role.
- Restricting exports to bring down excess capacities: The largest steel producer in the world took the path of cutting out excess capacities, with the government intervening by removing the export rebates of 13% from steel products effective from May’21. Further, the government openly stated its intent to levy an export tax by end-May’21 but is yet to come up with an official announcement on the same.
During H1CY’21 (Jan-Jun), China’s crude steel output aggregated to 563.30 mn t, up 11.8% y-o-y compared with 503.85 mn t in CPLY.
2. India crude steel output up 21.4% y-o-y: India, the second-largest steel producing nation, churned out 9.40 mn t more in June’21 against 7.74 mn t in the preceding year.
The country continued to battle the fierce second wave of Covid with sporadic lockdowns and limited hours of market activities since new cases picked up pace in early Mar’21. However, increased speed of vaccinating citizens in the country led to a gradual opening up of the markets by June.
a) Ramp-up in capacity utilisation rates: Major private Indian steel producer JSW managed to keep its utilisation rate at 91% in June’21, significantly up against ~25% in CPLY and 76% in June’20.
The production volumes had slumped last year owing to stringent lockdowns across the country and the labour exodus. However, the company raised its capacity utilisation rate in CY’21 due to improved downstream demand with a gradual return of labour this year.
b) Steep hike in export offers on the year: Higher demand along with higher realisations in the overseas markets, especially the UAE, Vietnam and Europe, led to a steep hike in Indian HRC export offers.
SteelMint’s Indian HRC FoB export offers spiked to $989/t FoB east-coast basis in June’21 contrasted against $435/t FoB in the same period last year. However, these have come down from the highs of $1,027/t FoB in May’21.
Meanwhile, during H1CY’21, output moved up 31.1% to 57.90 mn t against 44.10 mn t in CPLY.
3. Japan’s crude steel production spurts 44.4% y-o-y: Japanese mills produced 44.4% more of crude steel at 8.10 mn t in June’21 in comparison to 5.61 mn t in CPLY. Also, in Jan-June’21, production rose by 13.8% y-o-y to 48.10 mn t compared to 42.27 mn t in Jan-June’20.
The country has been on a recovery track with manufacturing activities picking up with the easing of Covid concerns although some restrictions are still there.
Meanwhile, infrastructure and other construction activities linked to Tokyo Olympic preparations were expedited which boosted demand a bit during the term.
Outlook
Steel production across the globe shall see a shift as the world’s largest producer, China, is cutting down on capacities to meet the carbon neutrality status by 2060. But other nations are looking to add more capacities. The Indian steel industry is working towards expansion with steel demand forecasted to improve in the coming years.
Thus, it would be interesting to see how much of a difference this shift will bring in the overall steel production volume in the near future.
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