World Enters 2014 with 542 Million Tons of Excess Steel Production Capacity

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Excess global steel production capacity is estimated to stand at about 542 million tons, with China reported to be carrying 46% of that amount.

Although crude steel production growth in China held steady at 7.8% in the first 11 months of 2013, the level of consumption is declining. With exports showing no significant increase, the problem of excess capacity is going to weigh on the Chinese steel industry throughout 2014.

China is committed to close a substantial amount of steel production capacity due to environmental protection issues, but there will be a number of new capacity additions, mainly undertaken by state-controlled companies. If demand stays weak and exports continue at current levels, excess capacity will continue.

Looking at specific products, the current annual production of 217 million tons of hot-rolled coils has to meet full China's domestic demand. This leaves an exportable surplus, resulting in 95% capacity utilization.

China's annual capacity of 140 million tons in coils and sheets is catered to domestic demand and exports. Galvanized products currently have a 66.5 million-ton capacity, but they have a utilization rate of only 53%.

Plate production has a current production capacity of 89 million tons and a capacity utilization rate of about 75%, with primary demand coming from the shipbuilding, machinery and equipment sectors.

The EU has an excess capacity of 106 million tons; the Commonwealth of Independent States (CIS) countries, which represent the former Soviet Union, has 81 million tons; and Japan has 63 million tons. The U.S., Canada and Latin America each have an excess of 15 million tons. All other countries have 14 million tons.

India's current level of crude steel production of 78 million tons (2012-13) indicates a capacity utilization of 81%. During the next three years, India will be adding nearly 30 million tons of capacity.

For related information, see January 9, 2014, article - India Targets 300 Million Tons Annual Steel Production in Next Decade.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.