Global crude steel production was 161.4Mt in April, a 2.4% year-on-year drop with the largest declines being in the EU (-11.7%), Turkey (-20.6%) - still impacted by the recent earthquakes -, the USA (-5.3%) and Japan (-3.1%). Only two major economies posted increases in production, South Korea (+3%) and India (+3.2%). 

For the first four months of the year, crude steel output was 622.7Mt, a 0.3% year-on-year decline. The main declines came also from the EU (-10.2%), the CIS (-7.9%), the US (-4.1%) and Japan (-5.3%). Steel production and consumption remained impacted by the deterioration of the global economy, tighter credit conditions and the perduring conflict in Ukraine. India’s steel production rose 3% during the January to April period, given its large, relatively insulated economy.

China steel production dropped 1.5% year-on-year in April at 92.6Mt, reversing the Q1 upward production trend. For the first four months of the year, China’s steel output is still posting a 4.1% increase with Q1 output boosted after China abruptly relaxed its zero-COVID policy in Q4 2022. Steel mills had restarted their blast furnaces in anticipation of the spring construction season and economic recovery following a weak H2 2022, however, the Chinese economic rebound has proven uneven, and the property market remains weak.

As the April data suggests, some cuts in production have taken hold, triggered by lower steel prices and margins. Nevertheless, blast furnace capacity utilisation rates remain high at 94% as Chinese mills tend to keep producing even at low margins to protect their market share. With the construction season nearly over, it is likely that more cuts in production and maintenance works will take place during the summer.

Project Blue believes that a gradual recovery of the property market will happen later in the year. We forecast a 2023 steel production of 1,030Mt, a small increase compared to 1,013Mt in 2022. In the rest of the world, the outlook remains subdued with all major economies close to recessionary levels. With consumption remaining strong and resilient, steel consumption and production in the USA are likely to outperform Europe’s. But overall, unless the global macro environment clears up in the second half of the year, 2023 is likely to be another difficult year for the steel industry.