Global crude steel production edged lower in July as declining output in China outweighed continued expansion across several other major steel-producing economies, according to Morgan Stanley.
Worldwide production decreased 0.3% year-over-year during July, leaving cumulative output 0.6% below the previous year’s level.
China was responsible for the overall contraction, with production falling 3.6% from July last year and 3.1% year-to-date. Excluding China, the picture was considerably stronger, with global output increasing 3.4% year-over-year and 2.4% since the beginning of the year.
US, India and Turkey Lead Growth Outside China
Production trends remained positive across a number of important steel markets.
India increased crude steel output by 1.9% year-over-year in July, taking year-to-date growth to 6.1%. US production climbed 4.4% from a year earlier and was 6.0% higher for the year so far.
Turkey delivered one of the strongest performances, with output rising 7.0% year-over-year and 7.9% year-to-date. South Korea also recorded solid growth of 6.4% and 2.7%, respectively.
Russia’s production recovered 3.3% compared with July last year, although output remained down 6.1% year-to-date. Japan recorded a modest 0.4% annual increase, while Brazil’s production was virtually unchanged with growth of just 0.1%.
Further Chinese Production Decline Indicated in August
China’s steel industry appears to have remained under pressure into August.
The China Iron and Steel Association’s month-to-date survey points to a 4.9% year-over-year reduction in output from Chinese mills, extending the weakness seen during July.
Despite lower domestic production, Chinese exports remain substantial. As of July, steel shipments from the country were running at an annualised pace of approximately 116 million tonnes.
The combination of weaker Chinese production and elevated export volumes remains an important factor for international steel markets and pricing.
European Steelmakers Report Improving Output
European production strengthened in July, with crude steel output across the EU27 increasing 3.8% year-over-year and moving 0.4% higher on a year-to-date basis.
Including the UK, European production advanced 3.5% from July last year, although cumulative output was unchanged.
Germany recorded growth of 3.0% year-over-year and a stronger 8.1% increase year-to-date. Italy’s production rose 4.2% annually and 3.6% for the year so far.
Elsewhere, Finland increased output by 13.0% from a year earlier, Sweden by 10.1% and Austria by 3.3%. France delivered a 12.5% year-over-year rebound, although its cumulative production remained 1.3% lower.
Several markets continued to struggle. Year-to-date steel output was down 13.8% in Spain, 5.3% in the Netherlands, 6.1% in Poland and 18.0% in the UK.
EU Hot-Rolled Coil Spreads Move Well Above Historical Average
Improving conditions in parts of the European steel industry have been accompanied by stronger hot-rolled coil spreads.
EU HRC spreads have climbed to $464 per tonne, significantly above their long-term average of approximately $320 per tonne.
The increase provides a more supportive margin backdrop for European steelmakers, even as the global production picture remains divided between falling Chinese output and stronger activity across many markets outside China.
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