Global steel production is a key driver for the demand of ferroalloys and metals. Let’s take a look at the numbers for 2019 and at what we expect for 2020.
In 2019, the global steel industry stagnated, with the exception of China. China was the only country among the big steel producing countries to increase its share in global output moving from 52% to 54%. Europe’s share decreased from 9% to 8%, and the North American share decreased from 7% to 6% (even though, production in the US picked up by 2% YoY, to 87.9 Mt). Japan contributed 5% to global steel production, a reduction from 6% in 2018. The share of South-East Asia remained the same at 13%, though again, the leading producer in the region, India, increased production by 2% YoY, to 111.2 Mt.
In 2019, Chinese crude steel output was up 8% YoY at 992.8 Mt, the Worldsteel reported on January 28, 2020, just missing by peanuts the magical number of 1 billion tons. Monthly output on an annualized basis had topped 1 billion tons over April-September, supporting expectations that production can exceed this psychological mark in the future. China’s apparent steel consumption was up 9.4% YoY to 894.5 Mt.
Meanwhile in Europe, the negative trend in steel demand in 2019 hurt domestic steel producers. Also, the new EU import quota regulations have created a rush for quota consumption by the overseas suppliers, including finished steel products stock building, disrupting the stagnating EU steel market. Worldsteel data shows, that, as a result, crude steel production in Europe has declined by 5% YoY to 152.2 Mt in 2019. Germany, Italy and France have contributed the most to this reduction, as all three countries decreased steel output by 5-7% YoY.
In 2020, we expect again some turbulence in world steel markets, impacting the ferroalloy demand globally. “The steel industry continues to face its traditional challenges - overcapacity, restructuring and trade frictions to name just a few. 2020 will also be by all accounts a year in which market growth will be slow in most regions” Edwin Basson, General Director at Worldsteel highlighted in early January 2020.
The European market conditions in 2020 are expected to improve moderately but risks related to import distortions continue to threaten the stability of the EU steel market. Amid the expected growth in real steel consumption of just 1.1% in 2020, the EU market remains at risk of being destabilized by third country imports.
In addition, in January 2020 headwinds for the steel industry increased. Following the coronavirus outbreak originating in the Chinese city of Wuhan, the situation has become almost unpredictable. Market participants anticipate a severe impact on steel demand after the Chinese New Year holiday. Steel fabricators and construction sites will suffer from a shortage of workers because of the extension of the holiday and traffic controls. Ultimately, the question is how the Chinese government will react and whether more economic stimulus will flow into the Chinese economy…
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