look news india
New Delhi: Chinese steelmakers have cut production in anticipation of a further drop in steel demand, leading to a squeeze on margins. China's steelmakers produced 829.4 million tonnes of steel in July, down 9 per cent monthly and year-on-year. Data from the National Bureau of Statistics recorded the lowest production in 2024. With this, total steel production in the first seven months of the year fell 2.2 per cent to 613.7 million tonnes.
A slowdown in China's real estate market and a drop in factory output have seen home prices fall sharply, and global markets have also seen a huge glut of Chinese metals. The world's biggest steel producer warned on August 14 that the industry is facing a crisis more severe than in 2008 and 2015.
With the decline in steel demand, the construction sector, the main source of demand for the industry, is also expected to be in a bad shape as there will be no significant increase in new home sales. On the other hand, the government's failure to accelerate spending on infrastructure despite this bad situation has also been a negative factor. Therefore, Chinese steel consumption is expected to decline by three percent in the year 2024.
The steel industry has been plagued by overcapacity for years. In an effort to reduce pollution, Beijing has been trying to limit output or maintain output at previous year's levels. Production rose sharply in 2020, surpassing the one billion tonne mark.
Following the results, German steel giant Thyssenkrupp also revealed a big drop in earnings, showing that the industry situation remains challenging. Earlier, ArcelorMittal also said that China's rising exports have created volatile conditions in the global market. Aryan ore futures fell 3.4 percent to $95.20 in Singapore on August 14, the lowest level since May 2023.
Rebar futures in Shanghai also fell more than four percent to their lowest level since 2017. Mining company BHP Group, which derives a large part of its revenue from selling aryl ore to China, also fell three percent. Aryan ore prices have also fallen to their lowest level since 2022 due to lower supply than global demand.
