By David Scutt at Business Insider
For the second month in a row, China’s crude steel output was greater than the rest of the world in April.
According to the World Steel Association, China produced 69.4 million tonnes of crude steel, overshadowing the 65.5 million tonnes produced in all other nations.
The World Steel Association represents approximately 85% of global steel production, including over 150 steel producers.
Combined, there was 134.9 million tonnes of crude steel produced worldwide in April, down from 137 million tonnes in March.
Although an epic statistic, China’s steel production actually fell from March when the nation produced 70.7 million tonnes of crude steel, the highest one-month total on record.
Compared to a year earlier, Chinese output rose by 0.5%, helped largely by a surge in infrastructure and residential property investment over the past three months, catching markets off guard with its speed and ferocity.
The pickup in investment, coupled with reported low inventories, led to enormous increases in steel prices and its raw ingredients such as iron ore and coking coal.
Over the same period output increased in Japan (+1.2% to 8.5mt) and the United States (+2.5% to 6.6mt) but fell in South Korea (-1.3% to 5.7mt), Russia (-0.4% to 5.9mt) and Brazil (-20.6% to 2.3mt).
Despite the recent spike in steel prices, particularly in China, capacity utilization worldwide came in at 69.2% in April, down from 70.7% in March.
Compared to April 2015 it has fallen by 1.5 percentage points, underlining acute overcapacity that continues to hinder profitability in the sector.
While the global sector is currently operating at around 70% of maximum capacity, the surge in Chinese steel demand has led to many Chinese mills experiencing profitability levels not seen since 2009, the height of the government’s unprecedented infrastructure stimulus spend which was implemented to counteract the effects of the global financial crisis.
The improvement in profitability levels has seen some marginal steel mills restart production, leading many analysts to question the desire of the Chinese government to implement meaningful reforms in the sector.