China’s crude steel production posted an 11.5% year-on-year rise, with January-July output up 2.5%, despite a weak demand.  

World crude steel production was 158.5Mt in July 2023, compared to 148.7Mt in July 2022, a 6.6% year-on-year increase, with January-July production down slightly at -0.1%. While China has maintained its steady supply of just above 90Mt per month since March, the rest of the world saw large regional differences. Steel output kept declining in the EU (-7.1%) in line with a weak economy and in South Korea (-9%) while some production recovery was seen in the USA (+0.5%) and in Japan (+0.9%). India’s production posted a 14.3% year-on-year increase thanks to its insulated economy with production in the country up 8.9% for the January-July period. 

Taking the January-July numbers, declines were across the board. Leading from the back includes the EU (-10.3%), Latin America (-7.4%), North America (-3.5%), Japan (-3.9%), Turkey (-13.5% due to the 2023 earthquake), Ukraine (-28.8%) and most countries in Asia except for China and India. Production also increased in the Middle East with a 2.3% year-on-year growth. 

China’s monthly steel production has exceeded 90Mt since March despite weak demand and a depressed property market. Blast furnaces operating rates are at 92% compared to 84% in August 2022 and such a high production can be largely explained by the new furnaces which came on stream since last year. It is also not unusual for Chinese mills to operate with low or no margins to preserve their market share, exacerbated by Chinese authorities being laxer than in recent years with regard to environmental restrictions. Although the recent Politbureau meeting voiced to stimulate the economy (including the real estate sector), few concrete measures were announced. Cutting interest rates has been, so far, ineffective.  

High steel production combined with low demand has resulted in rising inventories since the beginning of July, suggesting that cuts in production (most likely through extending the time of maintenance) will take place in the last part of the year, but with a magnitude difficult to evaluate. Annualising the January-July numbers would translate into an all-time high crude steel production of 1,074Mt for China, a scenario at odds with the country's goal to reduce its steel output. However, a 2023 production above last year remains a possibility based on the year-to-date data and Project Blue forecasts a 2023 production of 1,035Mt, up from 1,016Mt in 2022. 

Despite showing some recovery, steel production in 2023 is likely to post a year-on-year decline in the EU as the economic outlook remains subdued, while the US will most likely keep outperforming, thanks to stronger macroeconomics and consumer spending resilience. On a global basis, Project Blue forecasts a crude steel production of 1,904Mt, a 1.3% year-on-year increase.