China’s steel production in March
China produced 69.5 million tonnes of steel in March, as per the data released by the China National Bureau of Statistics. China is the largest steel producer, as well as the largest steel consumer. China accounts for almost half of global steel consumption. The iShares China Large-Cap ETF (FXI) gives you exposure to Chinese equity markets.
Production is flat
The previous charts shows the trend in China steel production. Steel production in March was almost flat on a year-over-year (or YoY) basis. However, it increased 12% as compared to the previous month.
China has been producing steel in excess of its domestic demand for several years. Steel exports from China have reached record highs as a result of this overproduction. It’s now the biggest steel-exporting country. Steel companies across the globe are crying foul over steel imports from China.
US steel imports
On March 26, top executives of US Steel (X), Nucor (NUE), and ArcelorMittal (MT) presented their case before a team of congress people from major steel-producing states. In particular, they briefed the representatives on the surge of steel imports in the United States. The higher level of steel imports is a major challenge for US steel companies. The SPDR S&P Metals and Mining ETF (XME) has a ~35% weight in US-based steel companies.
Though Chinese steel production in March has come down by ~1% on a YoY basis, China needs to do a lot more to bring supply side discipline. There has been some positive news from China that it plans to cut down its steel capacity by 80 million tonnes this year. If these announcements are followed by real action, it would be a big positive for the global steel industry.
You can learn more about the steel industry by visiting our steel page.