Never let a good crisis go to waste. US production, 4th in the world, plunged 32% in April. India’s production, normally in 2nd place, collapsed 64%.
By Wolf Richter for WOLF STREET.
Global production of crude steel – ingots, semi-finished products (billets, blooms, slabs), and liquid steel for castings – dropped 13% in April compared to April last year, to 137 million metric tonnes (Mt), according to the World Steel Association. While China’s production, at 85 Mt, was flat with a year ago, production by the rest of the world (without China) plunged 27% to 52.1 Mt.
India’s production, normally the second largest in the world, collapsed 64% in April. US production, in fourth place, plunged 32%. China’s crude steel producers – many of them state-owned – are doing in this pandemic what they did during the Global Financial Crisis: They catapulted their global dominance to the next level. In April, they produced 62% of the world’s crude steel:
In the year 2019, crude steel production rose 3.0% to a record 1,869 Mt, having soared 51% over the past decade, and 150% since 1996, according to data from the World Steel Association’s 2020 report, released this week.
During this period, there have been only three episodes when annual crude steel production declined: the Asian Financial Crisis in 1998 (-2.7%); the Global Financial Crisis in 2009 (-7.8%); and in 2015 (-3.0%), when China, under pressure from skidding steel prices, made a short-lived effort to get money-losing overproduction at its steel makers under control:
China’s steel giants, supported and often owned by various government entities, kept on producing crude steel during and after the Financial Crisis, even when there wasn’t enough global demand, causing prices to fall.
China’s market share dipped in 2008, during the Beijing Olympics, as some of the biggest steel producers and polluters were shut down to clear the air for global audiences. But then during the Global Financial Crisis, China just kept producing, and its market share of global crude steel production soared from 38% in 2008 to 46.6% in 2009.
In 2017, China outproduced for the first time the rest of the world combined. In 2018, it advanced its lead.
In 2019, China’s production surged 8.3%, while production in the rest of the world fell 2.3%. This pushed China’s market share to 53.3% for the year (and by April 2020, on a monthly basis, its share soared to 62%):
In 2001, China’s market share surpassed for the first time the market share of NAFTA (the US, Mexico, and Canada), and then look what happened:
Among the top 20 producing countries, only three increased their share since 2017:
- India, in second place. While its market share in 2019 dipped to 5.9%, after the jump in 2018, it was still higher than it had been in 2017 (5.8%). India had moved into second place in 2018, surpassing Japan.
- Iran, in 10th place, whose share rose from 1.2% in 2017 to 1.4% in 2019.
- Vietnam, in 14th place, whose share rose from 0.78% in 2017 to 1.1% in 2019.
All other major producers, including top producers Japan, the US, Russia, South Korea, and Germany, lost market share in 2019 and 2018.
China’s production of crude steel is 9 times the production in India, 10 times the production in Japan, and 11 times the production in the US. Marked in red: The US is in fourth place (87.8 Mt), Mexico in 15th place (18.5 Mt), and Canada in 18th place (12.9 Mt):
The 15 largest crude steel companies in the world in 2019
Eight of the 15 companies that produced the largest quantity of crude steel in 2019 are Chinese companies. Six of them are owned or controlled by government entities in China. The one US steelmaker on this list, Nucor, fell from 12th place in 2018 to 14th place in 2019.
There have been numerous international mergers in recent years, and production under one company can take place in various countries where the merged companies are located:
- ArcelorMittal (97.3 Mt). Includes shares in AM/NS India and China Oriental. In 2006, India’s giant Mittal Steel acquired French giant Arcelor. Registered in Luxembourg as a mailbox company, it is run from India.
- China Baowu Steel Group (95.5 Mt, up from 67.4 Mt in 2018); includes the tonnage of Maanshan Steel and Chongqing Steel – owned by the government of China.
- Nippon Steel Corporation (51.7 Mt); formerly Nippon Steel & Sumitomo Metal Corporation. Includes tonnage Sanyo Special Steel, Ovako AB, and shares in AM/NS India and USIMINAS – Japan.
- Hesteel Group, formerly HBIS Group (46.6 Mt) – owned by the government of Hebei Province, China. Includes Serbia Iron & Steel d.o.o. Beograd and MAKSTIL A.D. in Macedonia
- POSCO (43.1 Mt) – South Korea.
- Shagang Group China (41.1 Mt) – privately owned, China.
- Anshan Iron and Steel Group, or Ansteel Group (39.2 Mt) – owned by the government of China.
- Jianlong Group (31.2 Mt) – privately owned, China
- Tata Steel Group (30.1 Mt) – India.
- Shougang Group (29.3 Mt) – owned by the government of Beijing, China.
- Shandong Steel (27.6 Mt) – owned by the government of Shandong province, China.
- JFE Holdings (27.3 Mt) – Formed in 2002, in merger of NKK Corporation and Kawasaki Steel, Japan.
- Valin Group (24.3 Mt) – controlled by the Chinese state, with a minority of shares publicly traded
- Nucor Corporation (23.1 Mt) – North Carolina, USA
- Hyundai Steel Company (21.6 Mt) – South Korea
But it’s not like China is dumping crude steel on the global market.
China uses most of the crude steel it produces at its factories that convert it into finished steel products that are then either exported or used in China’s construction industry, including pipelines, and in its manufacturing industry to make components, motor vehicles, washing machines, towers of suspension bridges, etc., some of which are then exported as well (the tower of the new San Francisco-Oakland Bay Bridge and many steel components were made in China).
In terms of crude steel exports from China, the quantities amount to only about 5% of its total crude steel production. But at 48.3 Mt of net exports (exports minus imports), China is the largest crude steel net-exporter, ahead of Japan (26.7 Mt), Russia (22.7 Mt), and the Ukraine (14.0 Mt). The US is the largest net importer (imports minus exports) of crude steel (19.8 Mt) ahead of Thailand (15.1 Mt), and the EU (12.4 Mt).
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