Tracking Insights: The World May Yet Again See a Decline in Steel Consumption in 2016

June 7, 2016

By HV

The news about shrinking China steel inventory to a drop in China steel imports to Latin America to the decline in the world’s steel consumption may indicate another decline in the world’s steel consumption in 2016.

steelVery easy to find on the homepage of Sentifi is steel within the hottest commodities widget. The World Steel Association points out in its 2016 World Guide a decline in the world’s steel consumption for the first time in five years. 2015 saw a global steel consumption of 1.5 billion tons compared to 1.55 billion tons in 2014.

And 2016 may see another decline. China, which produces half of the world’s steel, has reported a decrement in its reinforcement bar steel in the past 11 out of 13 weeks. But that is good news for the steel counters as their shares rebound. Ann Joo Resources Bhd gained 9.52%, Southern Steel Bhd went up 3.65%, while Malaysia Steel Works rose 4.46%.

China exported a total of 36 million tons of steel during January-April 2016, which is 8% more than the same time last year, but that doesn’t mean other countries are importing more steel. Latin America is one of those regions. They exported 4.4% less steel in this period compared to last year due to a crisis in economy and the steel industry in Brazil.

Overall, many countries in Latin America have reduced their imports of China steel in the first quarter of this year, including Argentina (-77%), Brazil (-70%), Mexico (-64%), Ecuador (-54%), Venezuela (-27%), Peru (-26%) and Chile (-22%).

Lately, China has been accused of flooding the world market with cheap steel which has led to overcapacity problem as well as job cuts in the steel industry. U.S. Treasury Secretary Jack Lew has personally demanded the country to cut excess capacity to put an end to the distorting and damaging effect.


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