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Steel Prices Remain Elevated As Production Slides

Yesterday, MetalMiner’s Stuart Burns touched on the aluminum market and plummeting inventories, a trend in stark contrast to former times of plenty.

Meanwhile, in the steel market, global crude steel production totaled 145.7 million metric tons in October, the World Steel Association reported.

Steel production slides

The October steel total marked a decline of 10.6% on a year-over-year basis. Meanwhile, output increased by 0.4% compared with the previous month.

In China, the world’s top steel producer, output peaked this year at 99.5 million tons in May. Since then, China’s output has declined each month, according to the World Steel Association.

The country’s October steel production totaled 71.6 million tons, down from 73.8 million tons in September.

The pace of GDP growth in China slowed to 4.9% in Q3, according to National Bureau of Statistics data. GDP had increased by 7.9% year over year in Q2 2021.

For the year to date, China’s output of 877.1 million tons marks a year-over-year decline of 0.7%.

In turn, iron ore prices have continued to slide since May. After peaking at $260 per metric ton in May, Dalian iron ore prices dipped below $100 per metric ton this week, according to MetalMiner Insights data.

Amid slowing growth and turmoil in the real estate market, China’s steel demand is under pressure. Furthermore, on the doorstep of the winter heating season — typically running from November through March — production curbs will further limit supply from the country’s massive steel sector.

Earlier this month, ArcelorMittal forecast world ex-China apparent steel consumption to rise 12-13% this year. Meanwhile, it projected a contraction of Chinese steel demand.

“Due to weakening real demand in China, primarily due to real estate, our China ASC estimate is weaker than previously forecast,” the steelmaker said in its quarterly report. “ArcelorMittal now expects a slight contraction in Chinese apparent steel demand in 2021. However, the impact on ex-China steel markets is expected to be limited given that strict production constraints are expected to lead to lower Chinese net exports in the second half of 2021 overall as compared to the first half of 2021.”

Around the world

Among other top producers, Indian steel production totaled 9.8 million tons, up 2.4% year over year, the World Steel Association reported. India’s 96.9 million tons in the year to date marks a year-over-year jump of 20.6%.

No. 3 producer Japan produced 8.2 million tons in October, up 14.3% year over year.

Meanwhile, U.S. production increased 20.5% to 7.5 million tons.

US steel prices soften

For buyers looking for a bit of relief, steel prices in the U.S. have softened a bit in recent weeks.

Prices, however, remain elevated.

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U.S. hot-rolled coil closed last week at $1,832 per short ton, down 4.7% month over month. Meanwhile, cold-rolled coil closed at $2,108 per short ton, down 1.1%.

Hot dipped galvanized closed at $2,158 per short ton, down 2.3%.

In the long term, the recently passed U.S. infrastructure bill will likely boost demand for metals, especially steel. The American Iron and Steel Institute estimated a potential increased in steel demand of up to 5 million tons for every $100 billion in investment.

By AG Metal Miner

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  • George Doolittle on November 25 2021 said:
    Turkish production and exports of steel is soaring same said be true of Brazil.

    There is zero evidence that the reserve currency status of the US Dollar is somehow crumbling whereas Japan and Great Britain seem very much to be have hyperinflating economies now just as Turkey too...with China threatening same said as well as Australia, New Zealand, Canada, "the Euro zone" etc.

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