Global Steel Production Tumbles Even as China Recovers

Today, the WSA (World Steel Association) released its November global steel production data, which showed that production was down 1.0% YoY (year-over-year) in the month. Interestingly, production actually rose in China, the leading producer. Let’s look at the key takeaways from the data.

Global steel production

Today, the WSA released global steel production data for November. Production stood at 147.8 million metric tons last month—a yearly fall of 1.0%. Global steel production has now fallen for three consecutive months after posting strong gains in the first half of the year. Let’s drill deeper into the data.

China isn’t the culprit

China is the largest steel producer globally, accounting for almost 55% of global production. China’s steel production actually rose 4.0% last month after falling in October. The rise in China’s November production might sound counterintuitive to some. After all, its slowdown is making headlines globally. Furthermore, the country curtails some of its polluting industrial units at this time of the year to address the smog. However, there are a couple of things to consider. Firstly, amid a slowing economy, China has been somewhat lenient on polluting industrial units this year. Secondly, China’s economy showed signs of improvement in November. Several indicators show signs of the Chinese economy’s bottoming out.

Despite higher production, China’s steel exports fell last month. This signifies that the country’s domestic demand is healthier than what the outside world perceives it to be.

US steel production falls

US steel production fell 2.2% YoY in November, registering a third monthly fall. Despite President Donald Trump’s Section 232 tariffs, domestic production has sagged this year amid curtailments by domestic mills. Yesterday, U.S. Steel Corporation (X) released its fourth-quarter guidance and announced a new round of curtailments at its operations. Earlier this year also, it curtailed two blast furnaces in the US and one in Europe amid soft prices. ArcelorMittal (MT) has also curtailed its production in Europe this year.

The breakup of global steel production

Looking at the breakup of global steel production data, the European Union’s steel production tumbled 10.7% in November and is now down 4.2% for the year. Germany, the region’s largest steel producer, reported a 12.9% YoY fall in production last month. ArcelorMittal gets almost half of its revenues from Europe.

In Asia, Japan’s steel production fell 10.6% in November, taking its year-to-date fall to 4.5%. Indian steel production also fell by 2.8%. Among all the major economies, only China was an outlier and reported a yearly rise in November production. Given its tepid exports, most of that steel was consumed domestically. Perhaps China is no longer the villain US steel mills saw it as a few quarters ago.