Global Steel Tonnage Still Falling

Global Steel Tonnage Still Falling

China’s steel industry continues to be the world’s largest, but central planners’ efforts to eliminate excess capacity there and consolidate ownership groups are coinciding with a more general, worldwide decline in industrial demand.

Global raw steel production totaled 133.7 million metric tons during July, according to the World Steel Assn., 1.8% less than the June tonnage and 1.36% less than the July 2015 figure. Through seven months of activity for 2016, steelmakers worldwide have produced 929.6 million metric tons or raw steel, which is just 1.24% off the pace set during 2015.

Also during July, the global raw-steel capacity utilization rate was 68.3%, down 3.7% from June but unchanged from July 2015.

Raw steel is the output of basic oxygen furnaces and electric arc furnaces that is cast into semi-finished products, such as slabs, blooms, or billets.  The World Steel Association reports tonnage and capacity utilization data for carbon and carbon alloy steel in 66 countries; data for production of stainless and specialty alloy steels are not included.

Last spring, World Steel issued an outlook report suggesting final 2016 tonnage would show a year-on-year (-0.8%) decline in global steel demand, to an estimated 1.488 billion metric tons, following the -3.0% annual decline in the 2015 global steel production (1.62 billion metric tons.) 

The decline in tonnage documents steelmakers’ efforts to adjust their output and inventories to their local and regional demand, the circumstances in the largest steelmaking nation are more complex: while that industry is by far the world’s largest, Chinese central planners are implementing a strategy of eliminating excess capacity and consolidating organizational control over the nation’s largest producers. 

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