China still produced more crude steel than the rest of the world combined. Just a baby step, but a huge change in direction.
By Wolf Richter for WOLF STREET.
Production of crude steel – ingots, semi-finished products (billets, blooms, slabs), and liquid steel for castings – soared globally, and spiked in the US, but fell in China for the first time in years. And China’s share of global crude steel production, after soaring for years, fell for the first time since 2010.
Global production of crude steel rose 3.8% in 2021, from the prior year, to 1,952 million metric tonnes (Mt), according to the World Steel Association. But global production without China jumped by 12.8%, including in North America, where production soared by 16.6%, and in the US alone where production soared by 15.2%.
There have been three episodes of falling annual crude steel production since 1995 – and the pandemic wasn’t one of them: The Asian Financial Crisis in 1998 (-2.7%); the Global Financial Crisis in 2009 (-7.8%); and in 2015 (-3.0%). But during the pandemic in 2020, steel production ticked up a little, and in 2021, it rose 3.8%:
China v. the Rest of the World.
In China, crude steel production in 2021 fell 3.1%, to 1,032 Mt the first decline since 2015, and the largest decline in the data going back to 1996.
But in the rest of the world, production jumped by 12.8% to a record 920 Mt, after having sagged in 2020 and 2019. In 2017, China started outproducing the rest of the world, and the gap exploded in 2019 and 2020. But in 2021, the gap narrowed, and China’s share of global production fell by nearly 4 percentage points to 52.9%.
The year 2021 was a reversal. In 2020, of the top five largest producers – China, India, Japan, the US, and Russia – only China increased production. But in 2021, China’s production fell; in the other four countries, in fact in 18 of the remaining top 19 countries, production rose, and in some countries by the double digits, including the US (+15.2%). The other exception was Iran (-1.9%).
Over the two decades since 2001, global crude steel production surged by 129%, and nearly all of that gain was produced in China. Production in NAFTA (the US, Canada, and Mexico) exceeded China’s production through the year 2000. In 2001, China’s production blew past NAFTA and the gap exploded from there, as NAFTA’s production declined, and China’s soared. But in 2021, the gap narrowed. That’s why the reversal in 2021 was so peculiar:
The top 20 producing countries.
Production of crude steel in India, the second highest in the world, jumped 15.2% in 2021, to a record 118 Mt. But China’s production, even after the drop in 2021, was still nearly 9 times the magnitude of India’s production; and it was 12 times the magnitude of production in the US. Production crude steel in Canada and Mexico is hard to even see:
Most of the crude steel that China produced was used in China as input material for higher-value finished steel products for construction and manufacturing in China. In 2020, China used 56% of the world’s crude steel in its construction and manufacturing industries, roughly the same portion of global crude steel that it manufactured.
So it’s not that China is dumping crude steel on the global market; it produces the crude steel largely for domestic use, but then exports some of the higher value finished steel products, such as bar, pipe, and rolled steel. Chinese manufacturers also use the steel to manufacture sophisticated equipment with steel components, such as automotive components, cars, appliances, or high-speed train systems that are then sold domestically or exported.
Steel goes into nearly everything. So in 2021, amid all the horrid supply-chain problems, the world learned that it’s not such a great idea to be reliant to such a great extent on just one country. And while diversifying steel production to other countries, including the US, was just a baby step, it was still a huge change in direction.
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