Continued strength in China’s economy amid a rebound in investment has driven a substantial increase in global steel production, the latest report suggests.
Releasing its yearly data, the World Steel Association (worldsteel) says a 7.9 percent surge in China saw the overall volume of steel produced throughout the world rise 3.5 percent from 1,529 million tonnes (Mt) in calendar 2012 to 1,582 Mt in 2013.
Amid its role in manufacturing and construction, demand for steel in China has held up reasonably well in recent times notwithstanding concerns about the sustainability of the country’s growth rate as an upturn in investment in the second half of 2013 led to the economy to growing by 7.7 percent overall last year, according to the most recent IMF estimates.
Outside of developing countries and regions such as China, India, Africa and the Middle East, however, output in the developed world remains sluggish, with production levels down 1.8 percent in the EU and 1.9 percent in North America.
Indeed, overall levels of production activity outside China remain virtually stagnant.
Moreover, amid concerns of oversupply and overproduction in China spilling onto world markets, manufacturers of steel continue to struggle in a subdued pricing environment.
Despite having stabilised since a trough in the middle of last year, the average composite price for steel over all products and throughout all markets still remains more than a quarter below an early 2011 peak.
Concerns about oversupply are underscored by further data from worldsteel showing the world used less than three quarters (74.2%) of the steel it had the capacity to produce last month, though December is admittedly a seasonally quiet month.
Such an environment has impacted steel manufacturers in Australia, where output levels are down almost a third compared with two years ago as producers slashed capacity and headcount amid an environment of weak pricing, low demand and (at the time) a high Australian dollar.
BlueScope, for example, booked an $84 million loss after tax in 2012/13 after massive write-downs caused losses of more than $1 billion the year before.
In its most recent short range outlook released in October, worldsteel says it expects global usage of steel to grow by 3.3 percent in 2014.