The aggregated crude steel production of 64 countries stood at 174.4 million tonnes (mn t) in May ’21, as per the data released by the World Steel Association.
The output volume has increased by 16.5% against 147.70 mn t a year ago, on account of easing of Covid-19 restrictions propelled by vaccination drives across the globe and rising steel prices against those in CPLY.
SteelMint analyses production of the top three steel producing nations:
1.China’s crude steel output up 6.6%-China’s steel output was the highest at 99.50 million tonnes (mn t) in May ’21 rising 6.6% against 93.34 mn t in CPLY. Robust demand from the downstream industries and firm profits in the domestic market pushed mills to produce more despite the government’s effort to reduce annual output and curb carbon emissions.
During the five months of 2021 (Jan-May’21) China’s output aggregated 473.1 mn t, up 13.9% y-o-y compared with 415.36 mn t in CPLY.
2.India crude steel output rises 46.9% in May ’21-India, being the second-largest steel producing nation, produced 46.9% more y-o-y in May ’21 even though the country was battling a fierce second wave of Covid-19. The production volume stood at 9.2 mn t in May ’21 as against 6.26 mn t in the preceding year.
a)Higher capacity utilisation rates-Major private Indian steel producer JSW managed to keep its utilisation rate at 91% in May ’21 as against 83% in May ’20. Last year, stringent lockdowns and exodus of labourers during the month had weighed on production volumes. However, this year, the mill has been supplying liquid medical oxygen (LMO) during these trying times. Around 30,000 tonnes of LMO were supplied in May ’21 against 20,000 tonnes in Apr ’21.
b)Higher demand and realisations in overseas markets-Improved demand in the overseas markets, especially from the European Union and Gulf countries, for Indian steel products has been backed by higher production.
For instance, Indian mills have exported 1.15 mn t in May ’21, a mere fall of 6% against 1.22 mn t in May ’20 when the mills were focused on exports. However, the same was up by 28% against 0.90 mn t in Apr ’21. Another factor was higher realisations in the overseas markets.
Meanwhile, during the first five months of CY ’21 (Jan-May), output moved up 33.6% to 48.6 mn t against 36.38 mn t in CPLY.
3.Japan’s crude steel output rises 42.2% in May ’21-Japan’s crude steel output stood at 8.40 mn t in May ’21 compared to 5.91 mn t a year ago, increasing by 42.2% on a y-o-y basis as industrial demand picked up from a coronavirus-related slump.
a)Restart of blast furnaces-In the initial months of CY ’20, the steelmakers were forced to suspend their blast furnaces due to the Covid-19-led major dent in demand and market activities. However, this year, the recovery in demand at home and abroad, have led to a restart of some blast furnaces.
b)Resumption in demand-The demand from manufacturers, including automakers and industry machinery makers, has been steadily picking up.
During the first five months of 2021(Jan-May) the output stood at 40.0 mn t, up 9.1% against 36.66 mn t in CPLY.
Where will the trend go from here?
It is anticipated that the upward momentum in production shall continue in the near term. This would be led by:
- Improved downstream demand from countries across the globe with the increased speed of getting the citizens vaccinated.
- Impetus of the government towards infrastructural development in most of the countries.
- Shift towards green energy by the power, energy, and automotive sectors.
However, it would be interesting to see how the resolve of the Chinese government to reduce excess capacities and restrict exports impact the production volumes in the near term.
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