Global crude steel production rose in July following a modest decline a month ago, according to a recent World Steel Association (“WSA”) report. The international trade body for the iron and steel industry said that crude steel output for 62 reporting nations edged up 2% year over year in July to 130 million tons (Mt).
This compares favorably with a 0.1% decline in June. Slower growth in Asia, especially China, coupled with a sharp decline in the European Union led to the slump in production last month.
The growth in July mostly came on the heels of a 3.8% increase in output in Asia which produced 85.3 Mt of crude steel. Steel output clipped in the European Union, South America and Africa/Middle East while improved modestly in North America.
Growth was witnessed across major Asian producers. China, the largest steel producing country, registered an increase of 4.2% in output to 61.7 Mt. Japan, the second largest producer, recorded a 1.2% increase to 9.3 Mt. Production rose 5.4% to 6.6 Mt in India and 4.4% to 5.9 Mt in South Korea.
In North America, crude steel production edged up 0.9% to 7.4 Mt in the U.S., the third-largest steelmaker. Output in Canada jumped 12.7% to 1.2 Mt while falling 7.6% to 1.5 Mt in Mexico.
In the Europe Union, output from Germany nudged down 2.1% to 3.6 Mt while rising 6.6% to 0.9 Mt in the UK. Production declined 5.6% in France and 7.8% in Italy to roughly 1.4 Mt and 2.4 Mt, respectively. Spain and Turkey witnessed a 7% and 9.7% increase in output, respectively.
Overall output dropped 4.9% in the European Union to 14.2 Mt. The decline largely reflects the recessionary conditions in the region, which have led to a frail demand environment.
Among other notable producers, Brazil’s output fell 4.1% to 3 Mt while Russia registered a 3.6% increase to 5.9 Mt. Ukraine logged a 5.7% increase to nearly 3 Mt.
The WSA said that crude steel capacity utilization ratio for the reporting countries fell to 78.7% in July 2012 from 80.4% in June. The ratio also declined 0.8% year over year.
The global slowdown has taken its toll on the steel industry. Steel prices have been bludgeoned by weak demand and overcapacity in the industry. Furthermore, the festering Euro-zone sovereign debt crisis and its impact on the global economy remain an overhang on the industry. Moreover, steel producers have been clobbered by surging prices of key raw materials such as iron ore and coking coal.
A sluggish construction market, oversupply in the industry, sticky situation in Europe and slowing growth in emerging economies have weighed on the performance of major steelmakers, including ArcelorMittal (MT), U.S. Steel Corporation (X) and Nucor Corporation (NUE), in the June quarter. Decline in steel prices has been hurting margins and profits of steel players.
According to the WSA, world crude steel production reached 1,490 Mt in 2011. China alone accounted for roughly 46% of the output with Japan and the U.S. representing 7% and 6%, respectively.
The WSA envisions global steel usage to rise 3.6% this year, a decline from 5.6% growth in 2011. This reflects continuing slowdown of Chinese steel demand and the European debt crisis. Nevertheless, the industry body anticipates some recovery in 2013 and expects steel usage to grow 4.5%.
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