Crude steel struggle ex China

Global crude steel production was up strongly in January and February, but only thanks to surging production from optimistic steel mills.  The optimism in China is now perhaps a bit more fragile given very high rates of production, high stocks and government action to curb property market activity, although construction should still be ok for a few months yet. Elsewhere, run rates are weak.

The latest data from CISA suggests that crude steel production rates in early March in China remain high, continuing the strong growth in production seen in the early stages of this year.  Stocks at mills are reportedly starting to come down, although the rate of destocking over the coming weeks/months will be more important than the fact they are declining, which always happens at this time of year.

EU27 production continues to slip relative to last year, although at least the declines are getting smaller.  Many indicators still suggest that industrial activity will continue to fall in the foreseeable future.

Finally, crude steel production in key met-coal importing countries was flat YoY in February.  This, along with EU weakness, largely explains why met coal hasn't managed to recover from low levels, with more demand pull needed from these countries to pull shipments away from China, which is acting as an absorber of supply of last resort.