Global crude steel production drops 1.4% y-o-y in Jan-Nov'24; Turkiye and India buck trend

• Chinese crude steel output dips 2.7% y-o-y, as per WSA
  
  
• Turkiye records over 11% surge in production
  
  
• India's steel output rises 5.9% y-o-y in 11MCY'24
  
  

Morning Brief: Global crude steel production in January-November 2024 (11MCY'24) reached 1,694 mnt (or nearly 1.7 bnt), down 1.4% y-o-y as per latest data published by the World Steel Association (WSA). The 71 countries that report to the WSA account for around 98% of total global crude steel production.

Crude steel output in November stood at 146.8 million tonnes (mnt), an increase of 0.8% compared to November 2023. The decline in 11MCY'24 production may be attributed to, as per WSA, "persistent headwinds" in the global manufacturing sector such as declining household purchasing power, monetary tightening, and increasing geopolitical uncertainties.

Coupled with this, of course, is the weakness in housing construction which has been driven by tight financing conditions and high costs. All these factors have contributed to sluggish demand for steel.

Country-wise production

China produced 929.2 mnt of crude steel in 11MCY'24, a decrease of 2.7% y-o-y, while India came a distant second with output touching nearly 136 mnt, up 5.9% y-o-y.

The other major producers such as Japan and South Korea witnessed a decrease in production largely in the range of 3-5%. A similar trend was seen in the other key steelmaking geographies such as the US and Russia.

However, Turkiye stood out, recording an over 11% y-o-y growth in production in 11MCY'24 on the back of affirmative economic policies.

Country-wise overview

China slowdown: The decrease in China's steel production basically stems from lack of domestic demand, with real estate construction and infrastructure sectors continuing to slow down. Successive stimulus measures to revive the economy since September have led to marginal improvements. Crude steel production in November increased by 2.5% y-o-y. The manufacturing, EV and new energy sectors are bright spots for steel demand. However, direct steel exports have exceeded 101 mnt in 11MCY'24, again pointing to the weakness in domestic demand.

Robust demand despite high imports: Although India's steel demand has tempered somewhat compared with the pre-election year of 2023, domestic demand has grown by around 8% y-o-y in CY'24, thanks to sustained push from infrastructure and construction. That demand is growing at this level despite imports of over 10 mnt in CY'24, as per BigMint data, is really exceptional. However, regulatory safeguards are being mulled to protect the domestic industry from predatory imports and to stop capacity utilization from declining.

Adverse trends in Japan & South Korea: Headwinds in the automotive sector and global demand, high capital costs, weak construction sector sentiments, high electricity prices and a surfeit of Chinese steel exports at competitive prices were some of the key factors affecting the steel industries of these two advanced economies, not to forget currency fluctuations affecting exports.

Tailwinds in Turkish steel industry: Turkish crude steel output rose by over 11% y-o-y in 11MCY'24 to around 34 mnt on the back of increased domestic demand, fuelled by post-earthquake reconstruction, increased sales to Europe, and the government's proactive attempt to stabilise the economy with a new industrial policy supporting consumption.

Outlook

The ongoing downturn in the Chinese real estate sector is expected to dominate steel demand in China, resulting in a 3% decline in 2024 and a further 1% in 2025, according to the WSA, which also predicted an 8% growth in India's steel demand in 2025, thanks to major infrastructure investments.

With global steel demand forecast to grow by 1.5% in 2025, the stabilization of China's real estate sector, interest rate adjustments spurring private consumption and normalization of global steel trade remain key focus areas in the year ahead.

Especially, the impact of the US' tough tariffs on China and their impact on ever-increasing steel imports into India will be closely watched.