Global crude steel production dipped to 169.5 million metric tons in April, down slightly from the previous month, the World Steel Association reported this month.
Production in March had reached 170.1 million metric tons. Meanwhile, April output increased 23.3% year over year, up from 137.5 million metric tons in April 2020.
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Chinese steel production rises
Although global steel production backtracked slightly in April from the previous month, Chinese steel production increased.
The Chinese steel sector churned out 97.9 million metric tons, up from 94 million metric tons in March. Meanwhile, April output increased by 13.4% year over year.
Steel producers in China — and around the world — have benefited from soaring prices. Furthermore, earlier this month, Chinese steelmakers bumped up prices to account for significant rises in iron ore prices.
“Iron ore prices’ relentless rise this year went into overdrive Monday, hitting a +10% limit up and prompting the Dalian Commodity Exchange to raise trading limits and margin requirements in an effort to calm speculation,” MetalMiner’s Stuart Burns wrote earlier this month.
“Separately, the Shanghai Futures Exchange said it would set fees for closing positions on its steel rebar and hot-rolled steel coil futures contracts at 0.01% of the total transaction value. Those transactions had previously been free.”
However, as we noted in today’s This Morning in Metals, Chinese steel prices have plunged to start this week. Over the weekend, China’s National Development and Reform Commission issued a warning to commodities speculators and called on industry associations to maintain the “normal market order of the industry.”
Chinese steel prices are a leading indicator for steel prices elsewhere, including US steel prices. As such, market watchers will want to pay attention to Chinese steel prices. Further falls could serve as a harbinger for drops elsewhere, including for US steel prices.
Around the world
Among other top steel producers, the second-largest producer, India, churned out 8.3 million metric tons of steel in April. The output marked an increase of 152.1% year over year.
Japan produced 7.8 million metric tons, good for a year-over-year jump of 18.9%. Meanwhile, US production reached 6.9 million metric tons, or up 43.0%.
Estimated Russian and South Korean production reached 6.5 million and 5.9 million metric tons, respectively. Their April output totals marked year-over-year increases of over 15%.
US, EU to talk steel, aluminum overcapacity
The US and EU have agreed to begin a new round of talks aimed at tackling global steel and aluminum excess capacity.
“The distortions that result from this excess capacity pose a serious threat to the market-oriented EU and U.S. steel and aluminum industries and the workers in those industries,” the US and EU said in a joint statement this month. “They agreed that, as the United States and EU Member States are allies and partners, sharing similar national security interests as democratic, market economies, they can partner to promote high standards, address shared concerns, and hold countries like China that support trade-distorting policies to account.”
In addition, the parties indicated they aim to find solutions before the end of the year “that will demonstrate how the U.S. and EU can address excess capacity, ensure the long-term viability of our steel and aluminum industries, and strengthen our democratic alliance.”
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