Chinese and global steel production fell slightly from the previous month but remained near record levels in July, in what is usually a seasonally slower quarter and despite concerns that oversupply and the economic slowdown may weigh on prices.
Global crude steel production grew by 11.5 percent to 127.477 million tonnes in July, compared to the same month last year. That was not far off a record level of 129.865 million tonnes hit in April. China, the largest producer and consumer of the metals, was again largely responsible for the high production levels.
China's crude steel output hit 59.3 million tonnes in July, a whisker away from May's record 60.245 million tonnes. "China steel production has surprised people on th upside this year," Macquarie analyst Colin Hamilton told Reuters Insider. "The strength is in the construction sector. In China 55 percent of steel goes into infrastructure and construction, it is still at that stage of urbanisation and industrialisation. There is still plenty of growth to come." Autos and machinery production are going to be the key growth area for steel in China for the next five years, Hamilton added.
Fears over a slowdown of the global economy and overproduction put pressure on steel prices in the last few months. "Steel prices have been falling so far this year following the economic indicators but I think they may be close to a bottom" Hamilton said. Steel output in Japan, was up to 9.108 million tonnes from 8.885 million tonnes in June and only 1.2 percent down from July last year, showing that the world's second-largest steel producer is recovering after the March earthquake and tsunami.
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