MEPS reported that India was the only other major steelmaking nation to show a significant increase in production last year. Indian crude steel output rose by nearly 17% to just over 38 million tons. India recently adopted a national steel policy that will seek to raise production to over 100 million tons by 2020. Foreign investment is being encouraged.
China's steel production is showing some signs of deceleration, said MEPS. In December, growth had slowed to 16%, and this year's output is anticipated to grow only around 12% to 390 million tons.
“Fear of excess capacity is growing. This is piling downward pressure on steel prices and compressing producers' profits,” reported MEPS. “One manifestation of their declining profitability is the effort by the mills to play a bigger role in negotiating benchmark iron ore prices this year. The Chinese clearly fear that Japanese and European mills do not have quite the same incentives to cut input costs at this time.”
According to the American Iron & Steel Institute, China has ranked as the world's largest steel producer for the last 10 years in a row. Its steel output has grown by an annual average of 22.2% since the year 2000. Exports surged to an estimated 20 million tons last year, compared with 6.21 million tons in 2000.