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China pulls down global steel output in November

China pulls down global steel output in November

According to World Steel Association, global steel output dropped 3% compared with October, mainly is also what contributed to better than expected output growth in 2013–China. China's crude steel production rose by 4.2% from a year ago which is not a bad figure by itself, but it could have been even better but for a 6% sequential decline in production.

The onset of winter does see China's steel output decline but not to this extent. Sequentially, steel output declined by 4.2 million tonnes. One reason, according to a Reuters news report, is the government's clamping down on polluting steel units. Another cause could also be an oversupply of steel compared to the industry's expectations of steel demand, forcing them to cut output. Global capacity utilization in November declined to 75.8% from 77.5%, giving credence to that theory.

Whatever be the cause, it is reason to be a little more circumspect about the industry's growth prospects in 2014 and China's ability to keep the growth engine running. On the brighter side, the European Union region is showing signs of a recovery, with a 5.3% increase in output while North America's output rose by 3.5%. These two regions were worrying the market, which can be seen from their output in 2013 so far, the EU's output is down by 2.8% while America's output is down by 2.2%. The recovery marks an improvement in economic prospects of some major countries in the regions.

But emerging markets–apart from China–are showing signs of strain with Brazil and Russia reporting declines. India's output in this data is an estimate, since data has not been reported. But India's Joint Plant Committee gives some idea about the state of the industry. Finished steel production in the April-November period rose by 5.3%. This increase is mainly because of new capacity coming on stream but on the flip side, consumption rose by only 0.4%. The main problem for domestic steelmakers is one of lacklustre demand. Exports, too, don't seem an attractive option, as exports have risen by 6.9% only.