Changes in steel production, seen among the principal raw materials importing countries during the first half of this year, may set the pattern for 2014 as a whole. A general trend of higher volumes has evolved, but growth rates vary widely. In the European Union and South Korea output is picking up, while in China and Japan it is slowing.

Consequences for raw materials import demand and the exporters providing supplies, mostly involving seaborne trade, also vary. But most attention still focuses on China’s iron ore purchases, which form by far the largest single element. Chinese ore imports expansion recently has remained very strong, greatly boosting global movements, accompanied by some positive changes in other countries.


Figures showing steel output in the first five months of 2014 underline sharply differing performances. The divergences reflect contrasts in economic activity, progress in manufacturing industries using steel, and the momentum of construction work. Also reflected are more specific factors determining the relationship between steel demand and output, such as inventory variations.

The biggest percentage increase during January–May 2014, compared with last year’s same period, was seen in South Korea, where crude steel production rose by 9%, reaching 30.0mt (million tonnes). On a larger scale, this was followed by the European Union’s 5% increase to 73.3mt. In Germany, the EU’s largest steel producing country, a similar 5% rise to 18.9mt was reported.

China’s gigantic steel industry raised its production by under 3% in this year’s first five months, to 342.5mt. However, that calculation may be revised to show a slightly quicker rate when final output figures are eventually published. Growth was also achieved In Japan, although only a marginal (1.5%) increase to 46.1mt occurred.

This pattern may broadly continue over the remainder of 2014.The table below suggests a possible outcome, incorporating some adjustments to growth rates based on expected progress during the year’s second half. The group of countries shown comprise about 95% of global seaborne iron ore imports, and about 75% of global seaborne coking coal imports.


Despite a relatively slow steel production growth rate in the first five months of this year, China’s iron ore imports expanded very strongly. Compared with the same period a year earlier, the total was up by a remarkable 60mt or 19%, reaching 382.7mt.

Amid slowing economic activity in China, demand for steel has softened and there have been reports of surplus stocks becoming larger. Signs of slackening consumption in numerous manufacturing industries and in infrastructure and housing construction have emerged. These trends could continue for some time, consistent with government strategy attempting to rebalance the economy towards consumer spending and away from over-dependence on capital investment.

Although the steel production outlook seems fairly subdued, iron ore imports prospects remain very positive. The main argument supporting this expectation points to a continuing market-share gain for imported ore from Australia, Brazil and other foreign suppliers. Large additional volumes of ore entering the international market have already resulted in sharply reduced prices, resulting in lower-quality Chinese domestic ore being displaced.

Last year China’s iron ore imports, mostly sea movements, totalled 819mt, comprising two-thirds of global seaborne trade in that sector. In 2014 as a whole, the volume looks set to expand by a large amount. Coking coal imports are smaller but still significant, totalling more than 75mt last year, and could also increase but positive influences are not so prominent.


Among other raw materials importers, an upturn in European steel output has been a prominent feature this year. A slow EU economic recovery appears to be continuing, benefiting steel- using industries, although the revival is widely regarded as fragile and vulnerable to further setbacks. However, it is possible to envisage steel production rising by 3% or more in 2014, after two consecutive annual reductions.

Recently Eurofer, the European Steel Association, published a report indicating that EU steel demand, including some limited restocking, could grow by 3.4% this year. Several industries having a large influence on demand, such as vehicles, mechanical engineering, tubes and metal goods, comprising almost 60% of steel usage, are expected to achieve improved performances.

Confidence about further growth in steel output In Japan is more tentative. An economic recovery has been under way for some time, but there is uncertainty about its future progression. Doubts mainly reflect the effects of the sales tax rise introduced at the beginning of April, which is having, at least temporarily, a negative impact on consumer spending.

Caution about the trend in the period ahead was reflected in an early May survey by a Japanese government department. The compilation of steelmakers plans for April-June 2014 crude steel production revealed that the total could be slightly below the same period a year ago. Previously, there were five consecutive quarterly rises.

In South Korea prospects for a strengthening economy during the current year seem favourable. The Korea Iron & Steel Association reportedly envisages that steel production will increase by about 4%, a solid improvement after a similar reduction in the past twelve months. Higher iron ore and coking coal imports could result.

Richard Scott