Today, the WSA released global steel production data for May. Production fell 8.7% YoY in the month. Global steel production fell 13% YoY in April and 6% YoY in March. In the first five months of the year, production is down 5.2% as compared to the corresponding period in 2019. Meanwhile, the fall in production would have been even severe in May if not for the rise in China’s steel production.
China, the world’s largest steel producer, churned 92.3 million metric tons of steel last month, up 4.2% as compared to May 2019. On a year-to-date (or YTD) basis, China’s steel production is up 1.9% as compared to the corresponding period in 2019.
All other major steel-producing countries reported a fall in production last month. Indian steel production fell 39% last month and is down 24.6% for the year. Japanese steel production fell 31.8% last month taking the YTD decline 13.4%. South Korea’s steel production fell 14.1% in May and is down 8.9% for the year.
US steel production fell 36.6% in May and is down 15.5% for the year. U.S. Steel Corporation has idled some of its plants amid tepid demand and dismal pricing environment. In the European Union, German steel production fell 18.9% last month and is down 11.8% for the year. Italian steel production fell 43.6% last month taking the YTD decline to 26.9%.
While most countries designated the steel industry as an essential service, there have been voluntary cutbacks. End using industries especially the automotive sector was shut due to the pandemic that hit demand. As a result, steel producers realigned their production to the weak demand environment.
Meanwhile, amid weak global steel prices, we would see more protectionist calls globally. India’s steel minister has already called upon the industry to use more domestic steel. US steel companies anyways have the backing of Section 232 tariffs. European steel companies might also push governments for tariff protection.
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