Weakening influences affecting steel production in the main countries importing raw materials — principally iron ore and coking coal — were prominent during the first half of this year. In some countries signs point to a pickup emerging during the second half but, currently, there are only limited indications of revival and there is great uncertainty about the trend.

Most attention focuses on China’s iron ore purchases, which form by far the largest single element. The Chinese ore imports trend recently has slackened, although several forecasters still predict a substantial annual rise in 2015 as a whole. Elsewhere, raw materials imports into Japan, the European Union, and South Korea, also contributing large volumes, are experiencing a mixed pattern of influences.


A largely negative pattern of steel output changes evolving in various countries. is shown by figures covering the first five months of 2015. The changes reflect economic activity, progress in manufacturing industries using steel, and the pace of construction work. Other, more specific factors also determine the relationship between steel demand and output, such as inventory variations.

During January–May 2015, notable crude steel production changes were seen in Japan and South Korea. Sizeable percentage reductions (compared with last year’s same period) occurred. In Japan a decline exceeding 4% reduced the total to 44.1mt (million tonnes) while, in South Korea, a 5% decline resulted in a fall to 28.7mt. By contrast,Taiwan achieved over 5% growth to 9.7mt, based on provisional data, and in India growth of 6% to 37.7m was achieved.

The European Union’s steel production was flat at 73.2m in this period, although individual EU members’ experiences varied. Germany, the biggest producer, saw a 3% decrease to 18.4mt, and Italy’s output was 10% lower at 9.8mt. But Spain’s volume was up by 5% at 6.6mt, and the UK saw a minimal increase of under 1% to 5.2mt. Steel production in China, on a gigantic scale far greater than in any other country, was apparently down by about 2% during January–May 2015, at 340.2mt. However, Chinese data is often revised upwards when more complete information is available.That tendency implies a marginal reduction, or possibly no reduction.

What will happen over the remainder of this year? Annual crude steel output changes last year preserved a broadly positive pattern, at varying rates among the main countries shown in the table below. Currently a similar positive overall outcome is not assured. It seems more likely that in some areas decreases will be seen.


Iron ore imports into China in the early months of 2015 were consistent with a pattern of weakening, or at least flattening, steel production. Compared with the same period a year earlier, the ore imports total in the first five months was marginally (1%) lower, at 378mt.

But China’s iron ore imports are still fairly widely forecast to increase by a substantial amount in 2015 as a whole. This expectation is based on the view that further quantities of high- cost, lower quality ore, produced by domestic mines in China, will be displaced by lower-cost, higher quality foreign supplies. Australia in particular, which has been ramping up iron ore production, and other suppliers including Brazil are expected to benefit.

Nevertheless, it is evident that steel demand and resulting production at Chinese mills are not supporting raw materials consumption. Slowing economic activity is a prominent feature, reflected in slackening usage of steel in manufacturing industries and in infrastructure projects and housing construction. These trends probably will continue, amid government policy attempting to rebalance the economy towards consumer spending, and away from over-dependence on capital investment.

Conversely, another factor may have a short-term positive influence. Iron ore stocks at China’s ports recently fell to relatively low levels, implying a potential temporary boost when the inventory cycle turns. This influence may assist in raising the 2015 iron ore imports total (mostly sea movements, comprising over two-thirds of global seaborne iron ore trade), well above last year’s 933mt. Coking coal imports are smaller but significant, totalling 62mt last year, and a decline looks likely in the current period.


Among other raw materials buyers, Japan seems unlikely to experience much growth in iron ore and coking coal imports in 2015, after activity at steel mills weakened in the first half. A recent Japanese government survey revealed that steel manufacturers’ plans for crude steel production, in the April–June 2015 quarter, suggested a 6% fall compared with the same months a year earlier.

However, an improving economic performance now appears to be evolving in Japan, following a setback attributed largely to the adverse effect on consumer spending of the sales tax rise introduced last spring. Assuming that the trend remains positive, additional support for steel demand could emerge.

Earlier expectations of another rise in South Korea’s steel output and related raw materials imports during 2015 have faded. Growth prospects for domestic steel demand seem limited, and reports emphasize intensified competition from foreign suppliers of steel products, especially China.

In Europe, a slight acceleration in GDP growth over the current year may assist steel demand to increase modestly, with limited positive implications for steel output and raw materials usage. The latest estimates by Eurofer, the European Steel Association, put EU domestic steel demand almost 2% higher this year. Richard Scott