Global crude steel production rose for a third straight month in April on higher output from China – the world's biggest steel producer – according to a World Steel Association (“WSA”) report. Gains in the European Union, thanks to a recovery in steel demand in the region, coupled with a strong rise in the Middle East also contributed to the growth.
The international trade body for the iron and steel industry said that crude steel production for 65 reporting nations went up 1.7% year over year in the reported month to 137 million tons (Mt). This follows a 2.7% gain last month and a 0.6% rise in February.
By regions, production data paints a mixed picture with Asia, European Union, North America and Middle East recording gains while Other Europe, South America, the C.I.S., Africa and Oceania registering a decline in output.
All major Asian producers racked up gains barring Japan – the second largest producer. Output from China rose 2.1% year over year to 68.8 Mt in April. Japan saw a 2.5% fall in production to 8.9 Mt as a recent increase in sales tax by the government hurt demand in that country. Production in India, the fourth-largest producer, rose 5.3% to around 7 Mt. South Korea logged a healthy 10.8% gain to 6.1 Mt. Consolidated production rose 2.2% to 92.8 Mt in Asia.
In North America, steel production in the U.S. – the third-largest steelmaker – edged down 1.6% to 7 Mt. Output in Canada and Mexico, however, rose 2% and 12.1%, respectively, to around 1 Mt and 1.6 Mt, respectively. Overall production for the region inched up 0.7% to roughly 9.7 Mt.
In the Europe Union, production from Germany – the largest producer in the region – moved up 3.9% to 3.7 Mt. Output fell 4% in Italy to 2 Mt while climbing 16% to 1.4 Mt in France. Spain saw a 3.1% decline to 1.2 Mt. Production rose 13.5% in the UK to about 1.1 Mt. Total output rose 4% in the European Union to 14.6 Mt.
Output in the Middle East climbed 9.6% to 2.3 Mt with gains witnessed across all steel producing countries. Africa recorded a 2.5% decline to 1.3 Mt with a 2.4% fall in South Africa.
Among other notable producers, production from Turkey slipped 9.1% to 2.6 Mt. Russia, which is battered by its ongoing conflict with Ukraine, saw a mere 0.7% rise to 5.8 Mt while Ukraine registered a 4.5% decline to 2.6 Mt. Output from Brazil, the largest producer in South America, clipped 5.1% to 2.8 Mt.
Crude steel capacity utilization ratio for the reporting countries was 78.7% in Apr 2014, down from 79.9% a year ago and 79% in the previous month.
Steelmakers globally suffered the pangs of challenging steel market fundamentals, debt crisis in Europe and weak pricing for the most part of 2013. Overcapacity in the industry, a glut in cheaper imports and weak demand hammered steel prices during the year, hurting margins of major producers including ArcelorMittal (MT), U.S. Steel (X), Nucor (NUE) and AK Steel (AKS).
According to the WSA, world crude steel production rose 3.5% year over year to 1,607 Mt in 2013 as gains across Asia, Middle East and Africa more than offset declines in other regions. China alone contributed nearly half of the global output.
With the global economic recovery gathering steam and activities picking up in the construction sector, prospects look healthy for the steel industry in 2014. The WSA sees continued recovery in steel demand and expects global steel usage to increase 3.1% this year and further rise 3.3% in 2015. However, the industry faces challenges in form of an expected deceleration in steel usage in China and sluggishness in emerging economies due to certain structural issues.
A gradually healing economy, strength in the auto sector and a rebound in non-residential construction and housing markets are expected to help pull the U.S. steel industry out of its funk in 2014. Moreover, an expected rise in steel usage in the Euro-zone looks encouraging after a lumpy 2013, which augur well for recovery prospects this year. Improving demand, driven by healthy momentum in the automotive market, is also expected to jack up steel prices.
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