Via AG Metal Miner
COVID-19, poor demand, and several other factors caused a drop in steel production worldwide the past few years. This included China, which is not only the biggest steel producer, but one with a massive impact on steel prices. Indeed, according to a report by the World Steel Association, global crude steel production, including semi-finished products, ingots, and liquid steel, fell to 1.89 billion tons in 2022. This is 3.9% less than 1.96 billion tons in 2021.
The silver lining, as has become the norm now, was India. While China’s production fell for the second consecutive year, India was the only country on the list of large producers to increase steel production. In fact, the country’s output recently reached 125.3 million tons (MT), up from 118.2 MT in the previous year.
India’s growth is particularly significant, considering that many of the largest steel-producing countries, including China, Japan, the U.S., and Russia, experienced declines in production. In fact, Iran was the only other country among the top 10 nations to see a rise in steel output.
Steel Prices: India Commits to Further Increasing Output
Throughout 2022, China produced 1,018 MT of crude steel. This is 1.6% lower than 2021, when figures fell by 2.8%. Still, China produced more steel than the rest of the world combined and 12 times more than the U.S. Indeed, the country produces over half the crude steel in the world, and has been largely responsible for the surge in global crude steel production since 2000. Between that year and 2022, China’s production zoomed 735%. Meanwhile, North America’s production fell by 18%, and production in the rest of the world rose by 29%.
Now that China’s output is declining, India is seizing the opportunity. In 2019, India became the second-largest steel producer in the world, surpassing Japan. Though the gap between the #1 and #2 spots is still very large, experts believe China’s southwestern neighbor is on the ascendancy. After all, many expect India’s domestic steel demand to continue expanding in the coming years, driven by infrastructure development and increased construction activity.
Remember, India still has a very poor per capita steel consumption rate – just one-third of the world’s average. However, the Indian Government has set a target of increasing the share of the manufacturing sector to 25% of the GDP by 2025. It also hopes to achieve 300 MT per annum of steel production by 2030.
Production Declines Elsewhere an Opportunity for India
The Indian Steel Association (ISA) projects a 7.5% growth in domestic steel demand for the fiscal year 2024. This will put output at 128.85 MT compared to 119.86 MT in FY23. In FY25, the ISA expects a further 6.3% increase to 136.97 MT. This anticipated growth in demand is primarily attributed to the government’s focus on infrastructure development and the expansion of construction activities.
So far, in 2023, India seems committed to this path of growth, whereas China has allowed demand to drop. According to this report, global crude steel production decreased by 2.4% in April compared to the same period last year. The World Steel Association also noted that its 63 reporting countries produced 161.4 MT of steel in April 2023. This is a significant decline from the 162.7 million tons in April 2022. China alone saw a 1.5% decline, producing 92.6 MT of steel during the same period. Japan and the U.S. also recorded decreases in steel production by 3.1% & 5.3%, respectively.
Meanwhile, India saw an increase in steel production, growing 3.2% to reach 10.7 MT. Other global support came from Russia, whose production increased by 1.9% to 6.4 MT. South Korea’s output increased by 3% to 5.7 MT and Iran reported an increase of 5.9% to 3.1 MT.
Amidst China’s struggling construction sector and the looming possibility of recessions in the U.S. and Europe, there is no doubt that India is now a crucial factor in revitalizing global steel demand.
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By Sohrab Darabshaw
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