Baltic indices continue to express skepticism about the tangible impact of the latest Chinese measures, with trends mostly sideways during the twenty-first trading week.
Global crude steel production reached 18.88 billion mt in 2023, largely stable with 2022, according to Worldsteel data. In December, world crude steel production stood at 135.7 million tm, down 5.3 percent from December 2022 with Chinese output plummeting by 14.9 percent to a mere 67.4 million tm. China, the world’s largest steel producer, furnace 1.02 billion tm of steels during 2023, without any significant change year-on-year. India, the second largest global steel producer, increased production in 2023 by 11.8 percent to 140.2 million mt. Production in Japan, the third largest globally, dipped 2.5 percent to 87 million mt. Crude steel production in the US increased slightly to 80.7 million mt in 2023, but rose 7.6 percent in December. Russia's steel output rose 5.6 percent year-on-year to 75.8 million mt in the whole of 2023. During the same period, the European Union is reported to have reached 126.3 million mt in crude steel, down by 7.4 percent from 2022, with Germany reaching the lowest volume since 2009 of circa 35.4 million mt of steel.
In the first quarter of the current trading year, global crude steel production increased marginally by 0.5 percent year-on-year to 469.1 million mt. However, in March, global crude steel output declined by 4.3 percent year-on-year to 161.2 million mt, according to the World Steel Association. In Asia, crude steel output in March decreased 5.8 percent to 118.3 milion mt, with China's output losing 7.8 percent to 88.3 million mt. India’s production, on the other hand, increased by 7.8 percent year-on-year during March. Steel Production in India averaged 4 million mt from 1980 until 2024, reaching an all-time high of 12.7 million mt in March of 2024. The European Union produced 11.6 million mt in March, down by 4.3 percent year-on-year. However, Germany’s output expanded by 8.4 percent to 3.5 million mt. Moving to North America, crude steel output in March amounted to 9.5 million mt, a 1.4 percent decrease compared to the previous year, with the US maintaining stability at 6.9 million mt. In South America, crude steel output in March totaled 3.5 million mt, down by 0.2 percent compared to the same period the previous year, with Brazil's output reaching 2.8 million mt, up by 5.6 percent year-onyear.
While global steel output remained relatively stable in previous quarters, April witnessed a notable downturn, with the world's steel mills collectively producing 155.7 million mt, marking a five-percent decrease compared to global output in April 2023. China played a significant role in this decline, with the world's leading steelmaker producing 7.2 percent less steel this April compared to the same period in 2023. Year-to-date data indicates that China has produced 3.0 percent less steel in the first four months of 2024 compared to the same period in 2023. India stood out as the only producer among the top five countries to register growth in steel production in April.
Indian mills increased production by 12.5 percent compared to April 2023, and year-to-date figures show an 8.5 percent increase compared to 2023. This growth can be attributed to large infrastructure projects in the road, rail, and port sectors initiated by the government to stimulate growth and employment, which require significant quantities of steel as input. Meanwhile, Japan and the US produced 7.1 million mt and 6.7 million mt, respectively, both experiencing declines of more than two percent year-on-year. Russia's estimated steel production was 6.2 million mt, down by 5.7 percent, while South Korea produced 5.1 million mt, marking a decrease of 10.4 percent. In contrast, Turkey's steel production increased by 4.5 percent in April compared to the same period last year.
During the initial four months of this year, crude steel production across China's top 10 steelmaking provinces and autonomous regions amounted to 248.91 million metric tons (mt), marking a 2.16 percent decline compared to the corresponding period last year. As per the latest data from the National Bureau of Statistics of China, six of these regions reported year-on-year decreases in output, while the remaining four witnessed increases. Furthermore, statistics from the China Iron and Steel Association (CISA) underscore a significant drop in the profits of China's iron and steel enterprises, plummeting by nearly half year-on-year in the first quarter, with the average profit margin dwindling to a mere 0.58 percent. Addressing this concern, CISA's deputy secretary general, Chen Yuqian, emphasized at a recent press conference that the steel industry is grappling primarily with the challenge of low margins.
Amidst challenging conditions in the steel and property markets, Chinese authorities recently unveiled their most ambitious plan yet. This plan includes reducing minimum down payment requirements to as low as 15 percent, down from the previous 20 percent, and eliminating the floor on mortgage rates nationwide. Additionally, policymakers allocated 300 billion yuan ($42.25 billion) in financing for local state-owned enterprises to purchase unsold completed apartments, aiming to convert them into affordable housing. Despite these efforts, doubts persist regarding their effectiveness. Goldman Sachs suggests that China's housing market still has room to weaken, as previous attempts to revitalize it have failed to halt a three-year decline. Estimates propose that the government may need to invest more than 15 trillion yuan (US$2.1 trillion) to address the underlying issues plaguing the sector. In sync, Baltic indices continue to express skepticism about the tangible impact of the latest Chinese measures, with trends mostly sideways during the twenty-first trading week.
Data source: Doric