World
steel production in the first half of 2022 declined to approximately 5% below
the first half of 2021, ArcelorMittal referred.
While steel production in China weakened
during the second half of 2021 following restrictions on financing for real
estate developers, closures during the first half of 2022, especially in Shanghai in
April/May 2022, negatively impacted the real estate sector even more.
New apartment construction was more than 30% lower on a
year-on-year basis during the first half of 2022, which negatively impacted
steel demand and led to an increase in Chinese net exports to support steel
production.
At the same time, ArcelorMittal added, Chinese net exports of
finished products averaged 3.5 million tons per month between January and April
2022, while in May and June 2022 net exports nearly doubled to 6.9 million tons
per month.
During the first half of 2022, total Chinese crude steel net
exports increased to around 54 million tons annualized, similar levels to 2021;
but at a time of weakening demand in the non-China world, this has put pressure
on global steel prices and differentials.
Steel production
In developed markets, the strong recovery in demand in 2021 led
to a significant build-up in inventories.
As a result, inventories were at higher levels in the first half
of 2022, and together with high inflation weakening demand, caused steel
production to decline 4.5% y/y.
In Europe, where energy costs are particularly vulnerable to the
disruption of gas supplies from Russia, steel
production in the European Union and
the United Kingdom combined
declined by more than 6% y-o-y during the first half of 2022.
The situation in Europe has been deteriorating during 2022, with
production declining by 4% y-o-y during January to April 2022 and then by more
than 10% y-o-y in May and June 2022.
Meanwhile, in the United States, production also declined,
albeit less severely than in Europe,
approximately 2% y-o-y in the first half and, together with developed Asia (down
4% y-o-y), these regions together account for more than 50% of world production
excluding China.