Global crude steel output to fall as China widens its gap with others, says BHP

Global crude steel production will decline this year by 6 percent, even as leading producer China widens its lead in production over other countries helped by a smart recovery of its economy from the pandemic, Australian mining major BHP has said.

In 2019, China had expanded production by around 8.25 percent and the rest of the world had contracted by around 1.5 percent, BHP said in its 2020 economic and commodity outlook.

The gap has widened further under Covid 19 with China on track to increase production moderately in 2020, while ex- China output is expected to decline by a double digit percentage, the report said.

“Our preliminary assessment for the 2021 calendar year is for a percentage increase of similar magnitude to the 2020 contraction with pig iron lagging somewhat as rising scrap availability and lower scrap cost restore the competitiveness of production from the electric arc furnace fleet,” it said.

BHP said it anticipated global steel production to expand slightly faster than population growth in coming decades.

Chinese production rose to just shy of the one billion ton mark at 996 million tons in 2019, which is expected to grow by 2 percent during the current year.

While China was the first to report the corona virus outbreak, it has also emerged as the first nation to recover from the viral disease.

The rapid recovery has enabled China blast furnace utilisation rate to increase to above 90 percent in June from around 80 percent in February this year.

In comparison across the June quarter, all major ex-China economies were in lockdown, resulting in utilisation rate falling to between 50 percent and 60 percent in this group.

In the calendar year to June, second-largest producer India’s crude steel output fell by -24.2 percent while pig iron output fell by -19.4 percent year on year.

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