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Global Steel Production Takes a Breather after a Strong 2017

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Global steel production

Last year, we saw a sharp increase in global steel production. According to the World Steel Association (or WSA), global steel production rose 5.3% year-over-year (or YoY) to 1.69 billion metric tons. All steel-producing regions except for the CIS (Commonwealth of Independent States) reported a yearly increase in their 2017 steel production (X)(GGB). China’s steel production rose 5.7% YoY last year to a new record high. Meanwhile, after a strong 2017, global steel production seems to have taken a breather this year.

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Chinese steel production

According to the WSA, in January, global steel production rose only 0.8% YoY to 139.4 million metric tons. According to WSA estimates, China’s January steel production fell 0.9% from the corresponding month in 2017. However, we need to consider a couple of things in order to analyze China’s January steel production data. Last year, China’s Lunar New Year holidays began in January, while the New Year took place in February this year. The country’s economic activity tends to slow down during the New Year holidays. Plus, China has mandated winter capacity cuts in place this year, which could have led to lower steel production in January.

Europe

The European Union’s steel production rose 1.4% YoY in January. Germany’s steel production rose 1.5% YoY while Italian steel production rose 5.3%. ArcelorMittal (MT) derives almost half of its revenues from Europe. In contrast, AK Steel (AKS) and Nucor (NUE) get most of their revenues from the US market.

In Asia, Indian steel production rose 2.5% YoY in January while Japanese steel production was similar to the corresponding month in 2017. Japan is among the major steel exporters to the United States. According to a Reuters article, citing Kosei Shindo Japan Iron and Steel Federation Chairman, “Japan’s steel industry wants the country to be excluded from any U.S. import curbs as steel from Japan poses no threat to the U.S. national security.”

See Has the Section 232 Investigation Opened Pandora’s Box? to learn how the recommendations, if implemented, could impact US steel markets.

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