Global crude steel production rises 7% in October, paced by China

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China steel plant

gui yong nian/Adobe Stock

Not surprisingly, China paced a significant jump in October 2020 crude steel production.

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October 2020 crude steel production up 7%

October 2020 global crude steel production has bounced back after a down spring and summer.

In March, global crude steel production fell 5.7% before taking a 13.1% dive in April.

From there, output recovered, even as the world continued to struggle with the COVID-19 pandemic.

Output remained down on a year-over-year basis in May, June and July before finally posting a 1.9% jump in August.

September output jumped 3.9% before growing 7% in October.

China leads the way in October production

Meanwhile, top steel producer China posted a 12.7% year-over-year increase in crude steel output in October.

The rise followed a 10.9% jump in September and an 8.4% increase in August.

China’s output totaled 92.2 million tons in October.

As MetalMiner’s Stuart Burns noted recently, China’s economic recovery has powered the rise of prices for a number of commodities.

“Much of that rise has ridden on the back of a resurgent Chinese economic recovery driving such strong domestic demand that the country has switched to becoming a net importer on key metals this year,” Burns wrote.

“Ongoing policy stimulus in China has made its way into industrial and construction investment. That should continue to boost investment and industrial output in the coming months.”

With that said, while China’s currently robust run of economic recovery will likely continue into the near term, how much further it can conceivably go next year remains an open question.

“The research house raises two areas of concern. Firstly, the team expects fiscal support to be withdrawn,” Burns wrote, citing research house Capital Economics. “As a result, that will weigh on infrastructure investment.

“This, in turn, will drag on metals demand and prices, particularly for copper. Secondly, the firm expects stricter rules on borrowing by property developers. Stricter rules will weigh further on growth in new home starts and property investment.

“Neither of these trends is likely to hit metal demand adversely in the near term. However, as we move through spring 2021, the strength of the current rebound is likely to wane. Prices in the rest of the world relative to China could begin to normalize.”

Around the world

Continuing the theme, output gains were not as robust elsewhere.

Japan’s steel output in October fell 1.7%, while South Korea’s fell 1.8%.

Meanwhile, India is embarking on its own economic recovery effort, one that seems to be taking shape in a positive fashion (albeit not as strongly as China’s).

As Burns explained, the country is taking steps to bounce back from the devastating impact of the pandemic. Manufacturing activity hit a 10-year high in October, Burns noted. However, the country’s services sector remains badly hit by the pandemic.

India also recently announced a $16 billion stimulus package aimed at pushing the economic recovery along.

As for steel, India’s October output ticked up 0.9% year over year.

Elsewhere, U.S. production, while slowly recovering through the course of this year, remained down 15.3% year over year in October.

In Europe, German production rose 3.2%, while output in Italy and Spain fell 4.6% and 7.7%, respectively.

Meanwhile, Turkish output rose 19.4% year over year. As we noted yesterday, U.S. imports from Turkey surged from September to October. Furthermore, steel imports from Turkey rose 65% in the first nine months of the year compared to the same time frame in 2019.

Notably, after doubling the U.S.’s Section 232 tariffs on Turkish steel and aluminum in 2018, President Donald Trump reversed course last year and returned the tariffs to their original levels of 25% and 10%, respectively.

Does your company have a steel buying strategy based on current steel price trends?

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