India Only Top 5 Nation to See Steel Production Growth
In April, amidst a global steel production downturn, India emerged as a standout performer, exhibiting a 3.6% increase in steel output, contrasting starkly with the declines witnessed by other major players in the industry. China, the world's leading steel producer, faced a notable 7% drop in production during the same period, reflecting a broader trend of decreased steel manufacturing worldwide.
According to data from the World Steel Association, China's steel production in April plummeted to 85.9 million tonnes, down 7% compared to the previous year. This decline contributed to a 3% reduction in China's steel output for the January-April period, with production totaling 343.7 million tonnes, compared to 2023 figures.
In contrast, India's steel sector demonstrated resilience, with a 3.6% surge in April production, reaching 12.1 million tonnes. The country's January-April cumulative production amounted to 49.5 million tonnes, marking an impressive 8.5% growth compared to the previous year.
Meanwhile, other key steel-producing nations such as Japan, the United States, and Russia experienced declines ranging from 2% to 6% in their April steel production. Excluding India, these countries also reported decreased production levels for the January-April period compared to the previous year.
Analysts attribute India's robust performance to sustained domestic demand, despite sluggish global steel consumption. Sehul Bhatt, Director for Research at CRISIL Market Intelligence and Analytics, highlighted that high interest rates and inflation in the Western world have dampened demand from steel-consuming sectors, contributing to stagnant global steel production growth in 2023, with expectations for a similar trend in 2024.
The resilience of India's steel sector, however, has not shielded it entirely from challenges. Imports of steel into India surged in the January-March period, with reports indicating a 60% increase in imports from China alone. This influx of imports impacted the selling prices of Indian steel-makers, weighing on their March quarter earnings.
Globally, steel prices have faced downward pressure due to subdued demand. However, weak prices for iron ore and coking coal since February have supported profit margins for steel mills in India. Despite this, prices for hot-rolled coils, a key benchmark, experienced a nearly 10% year-on-year decline in the March quarter. Nonetheless, recent weeks have seen a slight uptick in prices, aligning with global market trends.