Global crude steel production continued to slump in November, fitting with recent price declines seen in steel, iron ore and coking coal prices.
According to the World Steel Association, a body that accounts for 85% of the global steel output across 66 individual nations, production fell to 127 million tonnes in November, a decrease of 4.1% on the levels of a year earlier.
Steel production in China – the world’s largest producer – fell to 63.3 million tonnes, a decline of 1.4% on November 2014. While a low base effect saw the annual decline narrow sharply, in absolute terms, production fell to levels last seen in February 2015.
Of the other major steel producing nations, production slid by 4.7%, 3.1% and 15.6% in Japan, Russia and the United States respectively.
Reflective of the continued drop in output, capacity utilisation levels across the global steelmaking sector tanked, falling to just 66.9%, a decline of 4% from November 2014.
Acute overcapacity – particularly in China – has reaped havoc on steel prices in 2015, placing significant downward pressure on iron ore and coking coal prices, the two main ingredients required for steel production.
Earlier this month Chinese premier Li Keqiang pledged “firmer resolve and greater efforts” to tackle overcapacity in the nation’s steelmaking sector, stating that the government was “determined to cut back on overcapacity in traditional industries as well as a large number of zombie enterprises”.
According to the China Iron and Steel Association, in the first eight months of 2015, large and medium-sized Chinese steel producers – supposedly in the strongest position to cope with deteriorating operating conditions – recorded losses of 18 billion yuan, a sharp turnaround from the profit of 14 billion yuan recorded during the same time period a year earlier.
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