tablefullpac

The growth and development of iron and steel industry is a reflection of global economy. The iron and steel industry depicts a changing nature in its growth and production pattern. In the mid-1970s, the relatively developed countries of North.

1. China Crude Steel Production Spatial Definition
2. China Crude Steel Production Spatial Formula
3. China Crude Steel Production Spatial Formula

America, Western Europe and Japan accounted for nearly two-third of the world’s steel production. But gradually the spatial pattern has changed and attention has now shifted to the developing regions.

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It can be seen that the crude steel growth rate is -0.095% while the current production equipment does not change; meanwhile, the desulfurization efficiency remains the current growth rate. To 2020, China's crude steel output reached 800 Mt (Scenario 1), and will produce PM emissions 2.43 Mt, 1.86 Mt less than 2015, reduced 43.62% emissions. India’s position is 9th in the iron and steel production and its production of pig iron and crude steel accounts for 3.9 and 3.6 per cent respectively. The spatial distribution pattern of iron and steel industry in major countries of the world is as follows (Figure 10.1).

Towards the end of the last century, the growth of steel production in countries like China, South Korea, Brazil and India has changed the entire pattern of steel production in the world.

Now main producers of iron and steel in the world are China, Japan, USA, Russia, Germany, South Korea, Brazil, Ukraine, India, France, Italy and Great Britain. The other steel-producing countries are South Africa, Australia, Austria, Netherlands, Czech Republic, Romania, Spain, Belgium, Sweden, etc. Table 10.1 indicates the production of iron and steel in major countries of the world.

Table 10.1

Production of iron and steel in major countries of the world:

It becomes clear from the table that China is the leading producer of iron and steel in the world, which accounts for about 23.9 per cent production of pig iron and 17 per cent of crude steel of the world’s production.

Japan is the second largest producer with 14.7 per cent pig iron and 13.9 per cent crude steel production of the world.

USA once the highest producer now ranks third in the world followed by Russia. India’s position is 9th in the iron and steel production and its production of pig iron and crude steel accounts for 3.9 and 3.6 per cent respectively.

The spatial distribution pattern of iron and steel industry in major countries of the world is as follows (Figure 10.1).

1. China:

China is having the oldest system of fabricators of iron, as is evident from its historical records. But until the adoption of her five-year plan in 1953, China had only insignificant iron and steel manufacturing of modern type.

Gradually, China has developed the iron and steel industry and now it is the highest producer of iron and steel in the world.

Since 1973, growth of steel production in China was spectacular and within a span of 15 years China was able to increase its production of crude steel to 217 percent. In that period consumption increased 300 per cent. This growth rate clearly reveals the rapid pace of industrialisation that is now going on in China.

The iron and steel industry is concentrated in Anshan, Wuhan and Paotow triangle. The biggest iron and steel factory was established in the Chinese mainland at Anshan in Manchuria by Japanese, but was greatly expanded by the Chinese with Russian help. Other iron and steel production centres in Manchuria are Fushun, Penki, Shenyang, Harphin and Kirin.

For Wuhan plants, ore is obtained from Taylh, i.e., 130 km away, and coal from Pingtinghan to the north of Yangtze River. The Wuhan steel plant is also in process of expansion. Other less extensive new steel plants are being created in Siangtan (Hunan), Tientsin, Tangshan, Nanking, Shanghai, etc.

At present, China is having following important areas of iron-steel industry:

(i) Southern Manchuria is the largest steel plant of China at Anshan and other plants at Pensihu and Mukden.

(ii) Shansi is also an old region of iron and steel production. In this region Taiyuan has been developed as a major steel centre.

(iii) The Lower Yangtze Valley: In this region Hankow, Shanghai, Hanyang and Chungking are the main centres of iron and steel industry.

(iv) Other centres are located at Paotow, Chinling Chen, Canton, Singtao and Huangsih.

The growth of iron and steel industry in China has been spectacular. Since 1973, China has increased its production of steel by 220 per cent, although her consumption of steel has also increased more than 300 per cent.

2. Japan:

In spite of the shortage of raw material (iron and coal), Japan has become one of the leading steel producers of the world. After China, Japan is the second largest producer of pig iron and crude steel in the world.

Yawata, the first steel plant was built in 1901 by government. Yawata is a major centre of heavy industry with about one fifth of Japan’s steel capacity. Kamaishi in Honshu and Muroran in Hokkaido are small tidewater plants.

The number of large-scale plants directly connected with regional mineral resources and those plants are only in Kamaishi, Kosaka, Osarizawa, Hassei (Akita), Hosokura (Miyagi) and Fujine (Iwate).

Over half of the Japan’s steel capacity is concentrated near the major port cities of Himeji, Kobe-Osaka and Tokyo-Yokohama areas of South Central Honshu.

Almost all the iron and steel plants of Japan are situated near tidewater. These steel plants, at or near tidewater, are thus able to draw raw materials from many parts of the world and similarly to ship finished products.

In Japan, large-scale concentration of iron and steel industry has occurred in the following regions:

1. The Tokyo-Yokohama Region:

It is having all facilities required for the growth of iron-steel industry. The reclamation of Tokyo Bay provided large, extensive plane land for steel manufacturing units. The Tokyo-China region is the main area in which steel industrial units have been developed at Hitachi and North Tokyo.

2. Nagoya Region:

It contributes about 20 per cent of the Japanese steel production. This region had witnessed a massive growth of industries within the period 1950-60.

3. Osaka-Kobe Region:

At the head of the Osaka Bay, a highly industrialised area known as the Kinki has developed. The port of Osaka is the main centre. Other centres of this region are Amagaski, Kobe, Hemegi, Sakai and Wakayama.

4. Fukuoka-Yamaguchi Region:

It is located in the extreme south of Japan within Kyushu and westernmost end of Honshu. The first government steel plant was established at Yawata in 1901. Kita-Kyushu is another notable iron and steel centre of this region.

5. Oka-Yamaha Region:

It is a new industrial region situated in between Osaka-Kobe and Hiroshima.

6. Hokkaido Region:

The main centre of this region is Murroran. A fairly big sized iron and steel industry has developed here depending upon local coal and iron ore.

The most striking feature in the locational pattern of Japan’s steel plants is that they are situated either on the Bay-Coast or on some canal or river. This is because of the fact that most of the Japanese steel plants depend upon outside raw material. Another feature is that they are located in the heart of great industrial districts which provide ready market for finished steel. In fact, localisation of iron and steel industry in Japan is market-oriented.

3. United States of America:

Once USA was the highest producer of iron and steel but now its rank is third in the world, next to China and Japan. In the US first iron and steel plant was estab­lished in 1629 at Massachusetts. During last 380 years or so the US steel industry has undergone through several changes. This change has not only occurred in growth and production pattern but also in localisation pattern. The major iron and steel regions in the USA are as follows:

(i) Appalachian or Pittsburgh Region:

The most important of all the regions is the northern Appalachian region of western Pennsylvania and eastern Ohio. This district contains about 42.5 per cent of the blast furnace capacity of the country and its centre, Pittsburgh, is the second greatest centre of steel industry in the world. The mills in this region are located almost exclusively in the narrow valleys of the headwater streams of the Ohio River, including the upper reaches of the Ohio itself.

The region, often known as the Pittsburg-Youngstown region, includes several districts. The Pittsburgh district consists of industries located in the valleys of the Ohio, Monongahela, and Allegheny, within 60 km of Pitts­burgh.

The Youngstown or the ‘valley’ districts consist of industries in the valleys of the Shenango and the Mahoning rivers.

Wheeling, Johnstown, Stenhenville and Beaver Falls are other important steel-producing centres. The chief disadvantage of the region is its remoteness from the sources of iron ore supplies, which come from the Lake Superior region partly by rail and partly by water.

(ii) Lake Region:

The lake region falls into:

(a) The Lake Erie ports; Detroit, Cleveland and Buffalo, etc.;

(b) The centers near the head of Lake Michigan, Chicago-Gary or Calument district; and

(c) The Lake Superior region, Duluth. These districts represent a somewhat different adjustment to the three factors in the localisation of the industry, coal, iron and market. The Lake Erie ports are nearer to the Appalachian coal, but farther from the iron ore than the Duluth region.

The Michigan region is midway between the two. One important advantage that all these districts enjoy over the Pittsburg region is that, owing to their location on the lake shores, one extra handling of iron ore is eliminated.

China Crude Steel Production Spatial Definition

On the other hand, these centres are located a little away from the market. Duluth, for example, has in its immediate hinterland the forest, farm, and the ranching country, with little demand for iron and steel goods.

Detroit is the largest steel consuming centre in the USA particularly because of its automobile industry.

(iii) Atlantic Seaboard Region:

On the Atlantic Seaboard, it is only the Middle Atlantic region (New York, Philadelphia and Baltimore, etc.) that is important. The chief advantage that this region enjoys is in respect of its location, both in relation to the tidewater, and the proximity to the large industrial centres of the East.

Its location near the centre of the great manufacturing region of the Atlantic Seaboard, the region of the densest population, and of the most intense industrial development in North America, is the most remarkable.

The Middle Atlantic region is the only major region in which the production of pig iron and steel is notably greater, in proportion, than the iron ore consumed, because of the relatively larger amounts of scrap available in this highly industrialised region.

There are many steel mills in this region which operate without blast furnaces, depending both on scrap and pig iron imported from other areas, particularly the Northern Appalachian region.

(iv) South Appalachian:

In the Southern Appalachians, in Alabama, however, large deposits of these raw materials are found in closer proximity than anywhere else in North America if not the world. While the ore is of low grade and requires shaft mining, much of the rock is lime and the ore is, therefore, self-fluxing.

The region lacks, however, large industrial centres in the neighborhood and has, therefore, a considerable amount of surplus pig iron which goes to the North.

(v) Western Region:

This region extends from Colorado in the interior to the California on the west. Among the steel region in the USA, this is a new region. The first steel mill, although had been setup in 1882 at Pueblo. Later on steel industries were developed at Fontana in California and Provo at Utah. For these plants, iron ore is obtained from Wyoming and coal from Colorado.

4. Russia-Ukraine (erstwhile USSR):

Prior to disintegration in 1991, USSR was the leading steel-producing country of the world. Now also Russia and Ukraine are important iron and steel producers of the world. Russia ranks 4th in the production of pig iron and crude steel, while Ukraine stands 8th in world ranking.

In the post-revolution period, the Soviet steel industry had achieved a remarkable expansion. During the Second World War, however, the Soviet iron and steel industry was affected badly.

Most of the large production centres were either destroyed or damaged. However, soon the country recovered and by 1975 became the largest producer of iron and steel in the world.

The four important iron- and steel-producing regions are:

(i) Ural Region:

It lies on both sides of the Urals. The major steel centres of this region are – Magnitogorsk, Chelyabink, Nizhnitagil, Sverdlovsk, Serov, Perm, Orsk, etc. Magnitogorsk is the largest steel-producing centre of Russia.

(ii) Kuznetsk or Kuzbas Region:

It is located in the north of the Alai Mountains and south of Tomsk. This steel region is coal-based. The supply of iron ore is from the Ural region. Novokuznetsk is the leading steel centre of this region.

(iii) Moscow Region:

Important centres of iron and steel in this region are Tula, Lipetsk, Cherepovetsk and Gorky.

(iv) Others:

Other regions are isolated and developed in various parts. These are Baikal, St. Petersburg, Lower Amer valley and Pacific coastal region.

5. Ukraine:

Now, Ukraine is an independent country and has 8th position in world s production of iron and steel. In this region all the raw materials, i.e., iron ore, coal, limestone, manganese are available for steel production.

A dense network of railways and cheap water transport facilitate the growth and development of iron and steel industry. The main centres of iron and steel plants are Krivoirog, Kerch, Zhdanow, Tagarerog, Zaporozhye, Pittsburgh, Dniepropetrovsk, etc.

Other notable steel-producing centres of independent countries are Tbilisi, Tashkent and Bogovat in Uzbekistan and Tamir Tan in Kazakhstan.

6. Germany:

Before World War I, Germany was the second largest iron and steel producer in the world. It was the largest exporter of steel goods in the world. German iron and steel industry was handicapped since after the war of 1914 by the loss of ore, coal and productive capacity.

Germany, however, made a remarkable recovery within a few years, and in spite of her depleted resources she produced in 1939 more than the 1913 production of steel. In 1937 she had established the great Hermann Goering Steel Works at Salzgitter to utilise the grade ores in its Harz Mts.

The division of Germany was the main cause of lower status in terms of iron and steel production. But after re-unification of East and West Germany in 1990, the country is now one of the leading steel-producing countries in the world and ranks 5th in the world with an annual production of 27.3 crore tons of pig iron and 41.7 crore tons of crude steel.

The most important centre of iron and steel industry in Germany is the Rhenish-Westphalia, contributing more than 80 per cent of the steel produced in Germany, and 85 per cent of pig iron. It manufactures a wide variety of special­ities.

Other regions of importance are the Siegerland Hessen-Nassau, Northern and Central Germany, Saxony, and South Germany. The greatest centre is Essen in the Ruhr valley where the world famous works of Krupp are situated.

China Crude Steel Production Spatial Formula

7. South Korea:

South Korea is the 6th leading country of the world in iron and steel production. It is the third Asian country after China and Japan which produces high-grade of steel. Its annual production is 24.8 crore tons of pig iron and 43.4 crore tons of crude steel.

8. Brazil:

Brazil is the 7th ranking country in iron and steel production in the world. Its annual production is 27.7 crore tons of pig iron and 27.8 crore tons of steel.

The development of the production of steel in Brazil has been spectacular. Since 1973, production of steel has witnessed more than 300 per cent increase. The consumption of steel within the country is very low.

Therefore, Brazil is able to export bulk of her steel production. Most of the steel industries are located around Sao-Paulo and Curumba.

Brazil possesses vast amount of iron ore. The largest of these deposits is located near Minas-Gerraes. Another large steel plant is located at Santa Catarina. Most of the mills obtain energy from hydel-power plants.

9. India:

India has a long history of the use of iron and steel. However, it was only after the first decade of the 20th century that manufacture of iron and steel as a modern industry made a beginning in this country. It was in 1911 that India’s first iron and steel plant – the Tata Iron and Steel Company Ltd. (TISCO) was set up in Jamshedpur in Bihar in private collaboration with a US firm. Nearly three and a half decades later another plant was launched at Burnpur in neighbouring Bengal — the Indian Iron and Steel Company Ltd. (IISCO) — with British participation.

At the commencement of Five-Year Plans (1951) there were three steel plants located at Jamshedpur, Asansol and Bhadravati. Not only capacity of these plants was increased but six integrated plants in public sector have been established at Durgapur, Rourkela, Bhilai, Bokaro, Vishakhapatnam and Salem, Apart from these more than 140 mini steel plants have also been set up to meet the growing internal demand. India is having the largest iron ore deposits in the world and also having coal, therefore, having very good prospects of the further growth of iron and steel industry.

10. France:

Till 1973, France was the 6th largest producer of steel in the world but now its position is 10th. France is the biggest iron ore-producing country of West Europe but there is scarcity of coal. In France, two regions are notable for iron and steel production.

These are:

(i) Lorraine, and

(ii) Sambre-Meuse. Metz, Briey, Nancy and Longway are notable steel centres of Lorraine region, while Clermount Ferrand, Le Creusot, St. Etienne, Lille, Valenciennes, Le Harre and Marseilles are important centres of Sambre-Meuse region. In Saar basin also, steel industry has developed on local coal deposits and iron ore from Lorraine.

11. Great Britain (UK):

Great Britain was not only the pioneer but a leading steel-producing country in the world for a long time. But its decline started in the first quarter of the 20th century. Now once again Great Britain has been able to establish itself as one of the important iron- and steel-producing countries and ranks 12th in the world.

The main advantage of UK’s iron and steel industry is that most of the centres are well-situated in relation to their coal and ore supplies and also have good facilities of importing raw material and exporting finished goods.

The most important steel-producing centres of UK are as follows:

1. North East Coast (Middles-borough, near New Castle, is the largest producing centre, and has the most modern equipment in Britain’s industry).

2. Derby, Leicester, etc.

3. South Wales (Cardiff).

4. Lincolnshire.

5. West Coast.

6. Scotland (Glasgow).

7. Sheffield and Birmingham (the oldest, but not the most outstanding).

8. Staffordshire.

12. Italy:

Italy now has emerged as a leading iron- and steel-producing country not only of Europe but of the world. It ranks 11th in the world’s production of iron and steel. Italy’s annual production is 10.9 crore tons of pig iron and 26.6 crore tons of crude steel.

Although Italy is having shortage of both coal and iron ore but it has developed this industry through well-planned management. The major steel plants of Italy are located at Naples, Genoa, Aosta and Trieste.

13. Poland:

Poland is an important producer of iron and steel in Europe. The main steel plants of Poland are located at Glewitz and Gracow.

14. Czech Republic:

Iron and steel industry is moderately developed in the country. The largest steel plant in the country is Skoda steel plant.

15. Sweden:

Sweden is very rich in her iron ore reserves. Energy is obtained from cheap hydel-power. Swedish steel is of very high quality. The best quality steels are generally exported. This country is not self-sufficient in ordinary steel production.

16. Holland:

This country is deficient in both iron ore and coal. As most of the steel plants are new, productivity rate is very high. The country has to import large amount of steel for domestic consumption.

17. Australia:

Australia is very rich in coal deposits. Most of the steel plants are new in Australia. So, the productivity is very high. The important steel plants are New Castle and Port Keembla.

18. Canada:

The Canadian steel industry is not very old. Most of the iron and steel centres were developed around Lake Ontario, Sydney, Nova Scotia. Canada is self-sufficient in the production of iron ore and coal.

Most of the coal reserves are located within Nova Scotia and iron ores are located around Sydney. Apart from that, steady supply of iron ore and coal from adjacent USA has enabled Canada to develop a large steel industry. Some of the major steel plants are Hamilton, Sault Ste, Ontario, Sydney, etc.

19. Mexico:

Mexican steel industry is as old as American steel industry. The largest steel plant is located at Mouterrey. The others are Monclova, Coahuila, Piebras, Negras and Colima. The coal is obtained from Salivas area and iron ores from Durango.

20. South America:

In South America, apart from Brazil, steel plants have been established in Argentina, Chile, Uruguay and Venezuela.

21. Africa:

The largest steel producer of Africa is the South Africa. In South Africa steel plants are located at Transvaal and New Castle. In other African countries, iron and steel industry has not yet been developed properly.

22. Asia:

In Asia, apart from China, Japan, South Korea and India, steel industry has also been developed to a limited extent in Turkey, North Korea, Iran, Taiwan, Malaysia and Vietnam.

Whether it's capacity cuts, pollution controls, government closures, economic troubles or tariffs on exports, nothing seems to stop China's mills from producing more steel.

Despite a three-year campaign to slash excess production capacity and government curbs to fight smog, the country's steelmakers have continued to set monthly records for output.

In July, China's crude steel production rose 7.2 percent from a year earlier to 81.24 million metric tons, making it the third month in a row over the 80-million ton mark, according to the National Bureau of Statistics (NBS).

So far this year, production is running 6.3 percent ahead of the 2017 record rate, a pace that would put output on track to top 884 million tons in 2018.

Last week, Reuters reported signs that the boom may have leveled off in August as a purchasing managers' index (PMI) for steel edged down to 53.4 from 54.8 in July, although it stayed well above the expansion-contraction tipping point of 50.

The steel indicator was significantly higher than the official PMI reading for all manufacturing, which ticked up to 51.3 from 51.2 a month before.

Last year, China accounted for 49.2 percent of global steel manufacturing, the World Steel Association said. In figures compiled through May, China's share of the reported world total reached 50.7 percent.

At the 2017 rate, China made more steel in a month than the United States made in a year.

Chinese steelmakers' records this year have been all the more remarkable in light of the forces lined up against them.

Most notably, the industry has been pressured to shut down old production lines since January 2016, when Premier Li Keqiang promised to shed 100 million to 150 million tons of surplus capacity by 2020. The excess was blamed for low prices, losses and overproduction.

Since then, the government has claimed closures of 65 million tons of annual capacity in 2016 and 50 million tons last year with a target of 30 million tons in 2018.

China Crude Steel Production Spatial Formula

The NBS cited China's production capacity in 2016 as 1.1269 billion tons, the Peterson Institute for International Economics reported. The figures suggest overcapacity could be down to 163 million tons by the end of this year if production continues at the current rate.

Seasonal suspensions

Aside from the targets for permanent downsizing, the government has imposed seasonal suspensions to keep coal-fired steel plants from adding to winter smog in the Beijing area during the heating season.

Judging by the series of monthly records, the seasonal curbs of up to 50 percent of normal production did nothing to slow industry output as activity shifted to other parts of the country, even though some cutbacks were extended into the spring.

'The reason we didn't see declines in steel output amid the environmental crackdown is that steel mills have improved their production efficiency by using higher grades of iron ore and adding more scrap steel to churn out more products,' analyst Wang Yilin at Sinosteel Futures told Reuters.

Another reason for increases is that steelmakers rushed to take advantage of rising prices after the market reacted to the capacity cuts, the seasonal suspensions and fears of a wider environmental crackdown.

In late July, the China Iron and Steel Association (CISA) reported a 14.6-percent price rise in the first half from a year earlier. Sales soared more than 15 percent to nearly 2 trillion yuan (U.S. $292 billion), while net profit more than doubled to 139.3 billion yuan (U.S. $20.3 billion), the official English-language China Daily said.

But there are signs that the steel mills' good fortune may be a headache for the government.

At an Aug. 16 briefing, an official of the National Development and Reform Commission (NDRC) said that meeting this year's capacity reduction target will be 'not an easy task' if profit margins remain at near-record highs.

In the first seven months, 24.7 million tons of capacity, or 82 percent of the 2018 target, was shut down. But the industry is under 'significant pressure' to restart outdated production to reap more profits, the official at China's top planning agency said, according to a separate Reuters report.

The restarting threat is an echo of problems reported over the past two years when many mills counted as closed quickly reopened after prices started to rise.

In 2017, a study commissioned by Greenpeace East Asia found that 73 percent of the claimed capacity cuts took place at plants that were already idled and that 54 million tons of capacity had restarted to take advantage of price hikes.

The government's accounting of closures and annual targets has yet to be audited for double-counting, which could explain the recent production records despite the reported cuts.

The government has acknowledged persistent illegal production in spite of repeated attempts to contain it.

In June, NDRC spokeswoman Meng Wei said the capacity campaign had produced effective results, speaking after eight inspection teams completed a survey of 21 provinces and regions for production of substandard steel bars.

Meng said that 'some weak links remain in certain regions, including the illegal use of production facilities and illegal addition of new capacity,' the official Xinhua news agency reported.

On Aug. 21, the government released an interagency set of rules for regulating the steel industry and 'prohibiting any support for illegal capacity in the sector,' China Daily said.

Some analyses have raised doubts about whether China's actual production levels will ever be known.

'China has closed about 150 million tonnes of steel production capacity over the past couple of years, but much of this was 'illegal' capacity built and operating without the correct permits, meaning that none of this output was in the statistics bureau's historical count,' said a Reuters commentary on July 17.

'We may never know how much steel China produced before the capacity closures. Even the Chinese authorities may never know,' it said.

The uncertainties about shutdowns extend beyond the historical data.

'As with all such edicts in China, there will be slippage as steel producers, often with the approval of regional authorities, resist pressure to close or curtail production,' the commentary said.

But government regulators face a more fundamental problem.

China's steelmakers appear to be overproducing whether prices are high or whether prices are low.

In the downtimes of 2016, steel plants overproduced to drive their competitors out of business, hoping to cover their losses with loans and side-bets on risky investments.

With price recovery, mills have boosted production to maximize profits, make up for past losses, and pay down their debts.

Their responses to price signals seem to defy market forces of supply and demand.

Steel production has been rising to new records while economic growth has been slowing.

Growth of gross domestic product in the second quarter edged down to 6.7 percent in the second quarter from 6.8 percent in the first, even before the effects of tariffs take hold.

In July, growth of industrial output slipped to 6 percent, bringing down the seven-month rate to 6.6 percent.

Investment in fixed assets has been steadily fading, with seven-month growth declining to 5.5 percent from 8.3 percent a year before.

Falling exports

Steelmakers appear to be oblivious, although some may have increased production in anticipation of a U.S. tariff slowdown starting in July.

While Washington has imposed 25-percent tariffs, the production records may be more of a problem for China than the United States.

Although China's steel production dwarfs those of other countries, its exports have been dropping this year, thanks in part to higher prices.

In the first seven months, China's steel exports fell 14 percent from a year earlier to 41.31 million tons, according to S&P Global Platts news service. The export volume was 7.7 percent of China's production, based on the NBS data for crude steel.

Very little of China's exports have been reaching the United States.

In the first five months, U.S. imports of steel products from China fell 2.2 percent from a year before to just 303,701 tons, although the value rose 8.2 percent, the Census Bureau said.

All this suggests that the distortion of price signals and production capacity may be more of factor for foreign markets than how much steel is actually getting through.

'The key issue is overcapacity, not production levels,' said Scott Kennedy, deputy director of China studies at the Center for Strategic and International Studies in Washington.

'If production is rising because of substantial increases in domestic demand and is not being foisted on global markets, then that is not objectionable,' Kennedy said.

But he added that 'none of this addresses an underlying problem, which is that many Chinese steel firms are state-owned enterprises with access to cheap credit.'

'So, even if overcapacity has been tamed for now, once China's economy slows and steel demand falls off, if past is prologue, state banks will again rescue steel firms and their excess output will again unfairly depress prices,' Kennedy said.