The most disturbing feature of the world steel industry, which gives a good insight into the state of global economy, in 2015 was prices falling to their lowest in a decade. That hot-rolled coil prices have risen by about a 10th so far this year brings little relief to steelmakers.
Near-term steel outlook remains uninspiring. The disturbing phenomenon for which China, which accounts for nearly half of global steel production, is largely responsible is due to supply staying in excess of what the market could absorb.
The 2.8 per cent contraction in world steel output at 1.62 billion tonnes last year that happened for the first time since 2009 was not enough to stir the market as industrial production and construction activities in major and emerging economies remained lacklustre.
To accentuate the problem, China in spite of producing 2.3 per cent less steel at 803.8 million tonnes (mt) became an aggressive seller in the world market in the face of waning domestic demand particularly from construction and housing sectors.
Last year saw China's steel exports rising 20 per cent to 112.4 mt provoking many countries hosting bruised steel industries to invoke trade defences from minimum imports price (MIP) to anti-dumping duty. Incidentally, China's exports were 105.2 mt output in Japan, where production fell 5 per cent.
Source: Business Standard