Global steel output falls but prices still depressed

Reuters: Global crude steel production fell 1.7% in April from the same month a year ago as output declined in major regions such as North America and China, which produces half the world’s steel, figures from an industry body showed.

Steel prices ST-CRU-IDX are languishing near their lowest in nearly six years amid oversupply, collapsing iron ore prices and a growth slowdown in China that has spurred the country to export record levels of steel at reduced prices.

Global crude steel output fell to 135 million tonnes in April from 138 million tonnes a year ago, though it was not far enough off record levels to dent the oversupply, according to figures from the World Steel Association (Worldsteel).

Output in China fell to 68.9 million tons, down 0.7% from a year ago, the figures showed.

China produces about 100 million tons more steel a year than it consumes. Its exports jumped 10.9% in April from March, despite the scrapping of an export rebate that was meant to rein in overseas sales of certain steel products.

Beijing is also introducing measures to cut excess steel capacity in order to tackle pollution, but some in the industry are skeptical, partly because it cannot afford to hurt employment in such a crucial economic sector.

Outside China, the Worldsteel figures showed output fell 7.5% in North America, 4.7% in the Commonwealth of Independent States, 13.2% in Africa and 7.7% in the Middle East.

The data also showed April capacity utilisation rates fell 3.2 percentage points from a year ago to 72.5%, indicating weak pricing power for mills because they have a collective capacity to increase output should demand recover.