Global crude steel production fell 2.1 percent in May from the same month a year ago, as output declined in most major producing regions including China, figures from an industry body showed on Monday.
Global crude steel output fell to 139 million tonnes in the month, figures from the World Steel Association (Worldsteel) showed, while output in China, which produces half the world's steel, fell 1.7 percent to 70 million tonnes.
The decline was in response to fading demand especially in top steel user China, whose economy is entering a more mature, less industry-intensive phase of development. It was not therefore expected to support global steel prices.
"Production has fallen but not enough to dent the global overhang. Capacity utilization rates are really worrying, (they) are obviously going to eat into mills' financial positions," said Jeremy Platt, analyst at UK-based consultancy MEPS.
May capacity utilization rates fell 3.4 percentage points to 72.1 percent, indicating a decline in steel mills' pricing power because of their collective capacity to increase output in response to any uptick in demand.
Outside China, output fell 6.7 percent in North America, 7.6 percent in the Commonwealth of Independent States and 2.2 percent in Africa, Worldsteel said. Output grew slightly in the European Union, South America and the Middle East.
Source: Reuters
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