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Can Lower October Steel Production Restore Supply Balance?

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October steel production

The World Steel Association (or WSA) released its October steel production data on November 20, 2015. It’s important for investors to keep track of the global and regional steel production data. One of the biggest concerns for the steel industry is a glut of steel in the international markets as a result of overproduction.

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Global production falls

  • According to the WSA, global steel production fell 3.1% year-over-year (or YoY) in October. In the first ten months of the year, global steel production has fallen 2.5% compared to the corresponding period last year.
  • Chinese steel production fell 3.1% YoY in October. On a year-to-date (or YTD) basis, Chinese steel production is down 2.2%.
  • Steel production in the United States fell 8.8% in October. US steel production has fallen similarly on a YTD basis. Steel companies, including U.S. Steel (X), Nucor (NUE), and Steel Dynamics, reported lower steel shipments in 3Q15. Looking at the falling trend in US steel production, these companies’ shipments could fall further in 4Q15.
  • Steel production in the European Union fell 3.8% YoY in October. On a YTD basis, steel production in the region fell 0.7%. ArcelorMittal (MT) reported lower 3Q15 steel shipments in Europe (VGK). It’s worth noting that Europe is ArcelorMittal’s biggest market, accounting for almost half of its revenues.
  • Steel production in India (EPI) rose 4.9% YoY in October. India has been a bright spot for the global steel industry.

But lower steel production alone won’t restore the demand-supply balance. We’ll get a clearer picture when we look at the demand side of the equation in the next part of this series.

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