The latest WSA data shows that China’s production was down considerably in May as Beijing fails to reignite key sectors in the economy.

World crude steel production for the 63 countries reporting to the World Steel Association was 161.6Mt in May 2023, a 5.1% decrease compared to May 2022, and a 1.2 decease on a year-to-date basis.

Much of the drop is due to China, which produced 90.1Mt in May 2023, down 7.3% on May 2022.  China’s recovery continues to be uneven, with domestic consumption and services rebounding while manufacturing activity remains weak. 

Importantly for steel demand, construction and property markets remain subdued with average new home prices in 70 major cities declining by 0.2% y-on-y in April, admittedly slower than the -0.8% March fall.  

Generally speaking, metals markets remain disenchanted with China’s stimulus efforts. Iron ore prices had trended upwards in recent week, having hit a five-month low of US$102/t in May, on the assumption that stimulus would kick-start construction, property and infrastructure projects and boost steel demand. However, iron ore futures traded in Singapore ended last week at US $112/t down from two-month highs of US$114.20 reached on June 19^th. 

Elsewhere, the WSA data points to the fact that China isn’t alone in terms of major steel producers seeing fallbacks. In May, Japan produced 7.6Mt, down 5.2%; the USA produced 6.9Mt, down 2.3%; and South Korea produced 5.8Mt. India continues to buck the trend, having produced 11.2Mt in May, up 4.1%; while Russia is estimated to have produced 6.8Mt, up 8.8%.

Project Blue’s latest outlook is for steel production to only return to 2021 levels by 2025.