China produced more steel than all other nations combined in May, continuing the theme seen in the previous two months.
According to the World Steel Association’s latest monthly production report, China produced 70.5 million tonnes of crude steel product in May, up 1.8% on the levels of a year earlier. It was also just shy of the record 70.65 million level hit in March this year.
World Steel captures data from 66 individual nations, covering approximately 85% of global steel production.
Of the other 65 nations that covered by the group, a total of 68.5 million tonnes was produced. Combined, total steel production globally came in at 139 million tonnes, down 0.1% on the levels of a year earlier.
Global capacity utilisation across the sector came in at 71.3%, down 1.0% on May 2015 and 0.1% on the levels of a year earlier. Despite the recent declines, it remains well above the cyclical low of 64.8% struck in December last year, a period that corresponded with the spot iron ore price tumbling to an all time record low.
The chart below, supplied by World Steel, reveals the recent surge in global steel production, thanks largely to a spike in Chinese output levels.
While Chinese steel production continues to hover near record high levels, Vivek Dhar, mining and energy commodities analyst, believes the recent acceleration in production levels, boosted by a surge in Chinese residential construction, is unlikely to last.
“Higher inventories in lower tier cities will likely remain a problem for China’s property sector, not only weighing on commodity demand at some point, but boosting concerns that the recent price uptick is more speculative than fundamental,” he suggests.
“With China’s stimulus measures likely to fade later this year, we think construction demand will weaken by 4Q16.”