Global crude steel production declined modestly in July, as continued weakness in China outweighed stronger output across several other major producing markets, according to Morgan Stanley.
Worldwide production fell 0.3% year-over-year during the month and was 0.6% lower on a year-to-date basis.
China accounted for the overall decline, with crude steel output falling 3.6% year-over-year in July and 3.1% year-to-date. By contrast, production outside China increased 3.4% from a year earlier and was 2.4% higher over the first seven months of the year.
India, US and Turkey Record Production Growth
Several major steel-producing countries continued to expand output. India reported a 1.9% year-over-year increase in July and growth of 6.1% year-to-date.
US production advanced 4.4% from the previous year and was 6.0% higher year-to-date, while Turkey recorded increases of 7.0% and 7.9%, respectively. South Korean output also performed strongly, rising 6.4% year-over-year and 2.7% year-to-date.
Russia’s steel production recovered by 3.3% compared with July last year, although cumulative output remained 6.1% lower. Japan posted marginal year-over-year growth of 0.4%, while Brazilian production edged up just 0.1%.
Chinese Steel Output Faces Further Pressure in August
Early indications suggest that China’s production downturn continued into August.
A month-to-date survey from the China Iron and Steel Association points to a further 4.9% year-over-year decline in output from Chinese mills.
At the same time, China continues to send substantial quantities of steel into international markets. As of July, Chinese steel exports were running at an annualised pace of approximately 116 million tonnes.
European Steel Production Shows Signs of Recovery
European production improved during July, with crude steel output across the EU27 rising 3.8% year-over-year. This lifted year-to-date growth to 0.4%.
When the UK is included, European output increased 3.5% compared with July last year, although cumulative production remained flat year-to-date.
Germany was among the stronger performers, recording growth of 3.0% year-over-year and 8.1% year-to-date. Italian production increased 4.2% from a year earlier and 3.6% on a cumulative basis.
Finland, Sweden and Austria posted year-over-year increases of 13.0%, 10.1% and 3.3%, respectively. France recorded a 12.5% annual rebound in July, although its year-to-date production remained 1.3% lower.
Not all European markets participated in the recovery. Spain, the Netherlands, Poland and the UK remained in contraction on a year-to-date basis, with output down 13.8%, 5.3%, 6.1% and 18.0%, respectively.
European Steel Margins Strengthen
Alongside the improvement in production across parts of Europe, EU hot-rolled coil spreads have climbed to $464 per tonne.
That compares with a long-term average of approximately $320 per tonne, indicating considerably stronger spreads for European producers despite the mixed global production environment.