Steel-producing
nations have recovered from the slump in production caused by the Covid-19
pandemic – with two major exceptions.
The
latest information released by the World Steel Association (worldsteel)
indicates that 2021 global crude steel output rose by 3.7 percent,
year-on-year, to an all-time high of 1.95 billion tonnes.
Steelmakers
in the European Union (EU) manufactured 152.5 million tonnes, in 2021 – a rise
of more than 15 percent, compared with the 2020 outturn.
German
steel mills got back on track, producing over 40 million tonnes, in 2021. This
was the first time in three years that annual output had grown. Blast furnace
production had been hardest hit by the coronavirus outbreak, with manufacturers
unable to respond to the rapid change in demand.
The
recovery in Italian output was supported by the refiring of several blast
furnaces at the long-troubled Ilva plant – one of Europe’s largest
steel-producing facilities – in the first quarter of 2021. This helped Italy’s
output to rise by 20 percent when compared with the figure recorded in the
previous year.
Other
European countries, outside the EU, also fared well in 2021. Their combined
output of 51.2 million tonnes represented an increase of 11.6 percent,
year-on-year.
US mills post record profits
Steelmakers
in the United States also performed admirably, producing 86 million tonnes of
crude steel, in 2021. Increased demand, following the easing of Covid
restrictions and announcements of major federal infrastructure spending
projects, led to record steel
prices in the country. Consequently, many top steelmakers
were able to post record annual profits. Several new capacity projects have
been announced in the United States. The majority of these will be powered by
electric arc furnaces.
Overall,
production rose in eight of the ten largest steel producing nations, in 2021.
Only China and Iran produced less than in the previous year. Of these eight
countries, four – India, Russia, Turkey, and Brazil – enjoyed record-breaking
years, producing more steel than at any time in their history. Combined, these
four countries produced over 270 million tonnes of steel – approximately 14
percent of the global total.
The
phenomenal growth in steel production seen in Southeast Asia has also continued
apace. Annual output in the region has more than doubled over the past five
years and now totals more than 49 million tonnes.
China bucks the trend
However,
melting activity in China, the world’s largest steel producer by volume, did
not follow this general trend. While output recovered strongly in the first
half of 2021, production restrictions, enforced by local officials, became
increasingly stringent as the year progressed.
This
was largely due to the change in priorities, to focus on growth through
increased domestic consumption, as highlighted in the country’s latest
Five-Year Plan. China’s desire to reduce environmental emissions, ahead of its
hosting of the Winter Olympics, in 2022, was also a key factor. As a result,
China’s total crude steel production declined by 3 percent, year-on-year, to
1.03 billion tonnes – marking the first drop in output since 2015.
MEPS’
latest five-year production forecasts – as included in our recent Steel Price
Outlook publication – suggest that, while this contraction
in output will be transitory, the era of record growth, seen previously, may be
over. Chinese output is expected to climb at a much lower rate than in recent
years – rising approximately one percent per year before tapering off at close
to 1.065 billion tonnes, from 2024.
Construction
of new steelworks will continue to be a regular occurrence in China. However,
due to the restrictions involved in the capacity replacement programme, any new
mills brought online must be offset by the closure of older, heavier-polluting
production facilities. This means the ratio of steel produced by electric arc
furnaces will increase in China over the coming years.
What happens next?
Capacity
expansion projects are progressing in various countries around the world. OECD figures suggest
that over 45 million tonnes of new capacity is due to come online between 2021
and 2023. Another 69 million tonnes is currently in the planning phase.
MEPS
expects that global crude
steel output will continue to rise over the next five-year
period. Total output is likely to reach 2.06 billion tonnes, by 2026. We
anticipate that much of this growth will occur in Asia and the Middle East,
with India accounting for one quarter of the additional tonnage.
Source: MEPS