But with global economies slowing, where will it end up?

China’s zero-COVID measures placed severe restrictions on the country’s economic activities. But late in 2022, faced with growing public demands to end the lockdowns, the government did an about face and reopened the economy.

That risky reversal led to increased levels of COVID infections and deaths, in the short run, and additional localized lockdowns, but the spread of the virus was reported to have abated relatively quickly. Another result of the policy change was a jump in steel production in China, thanks to the reopening of factories. It still remains to be seen, however, whether those increased volumes of steel will be able to be absorbed domestically and or internationally.

Steel: Mixed Results

Many economists are insisting that a global economic downturn is in store, which would depress steel demand, although the data have been mixed. Reading the tea leaves when it comes to China’s economy and its steel industry, on the other hand, yields a decidedly negative outlook.

The World Steel Organization (WSO) reported that China’s steel production in March was up 6.9% compared to March 2022 and 6.1% year to date. Those figures grew on February’s numbers, which showed a 5.6% increase over February 2022, and the same year to date. Global production increased by 1.7% in March and decreased by 1.0% in February.

China’s March performance outpaced other major steel producers by a long shot. India’s steel production was up 2.7%, as was Italy’s, while Russia’s and Germany’s output remained flat. Japan, the United States, Brazil, and Turkey were all down, the latter two by 8.7% and 18.6%, respectively.

Steel rebar futures traded in Shanghai have been plummeting of late, by over 15% as of late April, from a recent high in mid-March. The late-April figure of $528 per ton was the lowest in over five months, according to Trading Economics, reflecting “deepened concerns over weak demand in China.

“The recovery of construction and infrastructure activity in China failed to materialize,” Trading Economic commented, “despite the country’s reopening and a round of government stimulus and liquidity injections.”

New construction starts in China dropped by over 20% during the first quarter of 2023, government data show, and property investments decreased by 5.8%. An April survey showed iron ore inventories in Chinese ports up 1% over a week, “pointing to limited demand from steel producers,” Trade Economics said. A Chinese steel industry group is urging producers to cut output, and reports indicate that the government could reduce production by 2.5% this year.

China Steel Demand

According to Worldsteel, China’s total steel demand declined by 3.5% in 2022, is expected to grow by 2.0% in 2023, and to stay flat in 2024. By contrast, global demand will see a 2.3% rebound this year and 1.7% growth in 2024.

“In 2024, demand growth will be driven by regions outside China but faces global deceleration due to China’s anticipated 0% growth, overshadowing the improved environment,” said Máximo…

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