Global crude steel output, a gauge of economic health, rose 4.6% in the first half of this year versus the same period last year, as strong margins prompted mills in major producing countries to ramp up, industry data showed on Thursday.
Crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 881.5-million tonnes in the first half. In June, it rose 5.8% versus June last year to 151.4-million tonnes, worldsteel said.
Production in China, which makes and consumes half the world's steel, rose 6% to 451.2-million tonnes in the first half, and gained 7.5% in June versus June last year to reach 80.2-million tonnes.
"We expect global production to continue to rise in the next few months as Chinese mills take advantage of higher margins and boost output ahead of winter [production] restrictions," Capital Economics said in a note. "At the same time, the tariff on US steel imports, coupled with high prices, will continue to incentivise US output. [This] underpins our bearish view on prices this year."
The research house sees US hot rolled coil at $800 per tonne at the end of the year, down from $915 today.
US President Donald Trump slapped tariffs of 25% on incoming steel in March this year, and extended them to cover major suppliers Europe, Canada and Mexico on June 1 after their exemptions ran out.
The steel industry, the world's second largest after oil and gas, is worth about $900-billion a year.
Steel output in the United States rose 2.9% in the first half to 41.9-million tonnes and gained 0.8% in June to hit 6.9-million tonnes, worldsteel data showed, indicating strong demand for the metal as the economy powers ahead.
Data from the American Iron and Steel Institute shows that capacity utilisation at US mills in the year to July was 76.4%, up from 74.4% in 2017, indicating tariffs are proving effective in boosting domestic production.
Output in India, which this year overtook Japan to become the world’s second largest steel producer, rose 5.1% in the first half, while Japan's production of the metal was 1.3% higher during the period.
Global steel equity values have more than doubled since hitting 12-year lows in early 2016 at the peak of the steel sector crisis. Worldsteel represents more than 160 steelmakers accounting for 85% of global output.